9 ANNUAL REPORT 2012-13 - Bombay Stock Exchange › bseplus › AnnualReport › 533059 ›...

Regd. Office: Marathon NextGen, B-2, 5 th Floor, G.K Marg, Lower Parel, Mumbai: 400 013Tel.:91-22-24824500. Fax.:91-22-24931685 www.brandhouseretails.com

T H9 A N N U A L R E P O RT 2 0 1 2 - 1 3

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9TH ANNUAL REPORT 2012-13BRANDHOUSER E T A I L S

BOARD OF DIRECTORS

Nitin S. Kasliwal - Chairman & Managing Director

Vijay Kalantri - Non-Executive Director

Jagadeesh S. Shetty - Non-Executive Director with effect from 10 thNovember, 2012

Jyoti N. Kasliwal - Non-Executive Director upto 24th August 2012

Susheel Kak - Nominee - India Debt Management Private Limited upto 10 thJanuary, 2013

Denys Firth - Nominee - India Debt Management Private Limited upto 10 th January, 2013

Alexander Shaik - Alternate to Mr. Denys Firth upto 10 th November, 2012

Navin Sambtani - Alternate to Mr. Denys Firth from 10 thNovember, 2012 to 10 thJanuary, 2013

Dara D. Avari - Non-Executive Director upto 1st March, 2013

COMPANY SECRETARY & COMPLIANCE OFFICER REGISTERED OFFICE

Dipesh U. Gosar (with effect from 10th November, 2012) B-2, 5th Floor, Marathon NextGen,

Pulak Banerjee (Upto 10th November, 2012) Off G. K. Marg, Lower Parel,

Mumbai – 400 013

AUDITORS

M/s. Haribhakti & Co., Chartered Accountants

M/s. Shyam Malpani & Associates, Chartered Accountants

REGISTRAR & TRANSFER AGENT BANKERS

Datamatics Financial Services Limited Bank of India

Plot No. B-5, Part B Crosslane, IDBI Bank Limited

MIDC Marol, Andheri (E), Mumbai - 400 093 Union Bank of India

Website: http://dfssl.com Central Bank of India

2

BRANDHOUSER E T A I L S

9TH ANNUAL REPORT 2012-13

CONTENTS

Directors’ Report 3

Management Discussion and Analysis 7

Report on Corporate Governance 10

Independent Auditors’ Report 27

Balance Sheet 32

Statement of Profit and Loss 33

Cashflow Statement 34

Notes to Financial Statements 35

3


DIRECTORS’ REPORT

Dear Shareholders,

Your Directors have pleasure in presenting the Ninth Annual Report and Audited Accounts of the Company for the year

ended 31st March, 2013.

FINANCIAL HIGHLIGHTS (` In Lacs)

Particulars 2012-13 2011-12

Sales & Other Income 81,504 78,357

Expenditure towards sale including cost of sales 79,591 72,851

Profit before Depreciation, Interest and Taxation (PBDIT) 1,913 5,506

Interest & Bank Charges 3,962 2,992

Depreciation/Amortisation 670 974

Profit/(Loss) before Exceptional Items and Tax (2719) 1,540

Exceptional Items 4148 -

Profit/(Loss) before Tax (6867) 1,540

Income Tax for current year - 702

Income Tax for earlier years (1517) 147

Provision for Deferred Tax (Asset)/Liability 200 (159)

Profit/(Loss) After Taxation (PAT) (5550) 850

PAT brought forward from last year 614 -

Transferred to Debenture Redemption Reserve - 236

PAT carried forward to next year (4936) 614

YEAR IN RETROSPECT

The Sales & Other Income for the year was ` 81,504 Lacs recording an increase of 4.02% over the previous year. Profit

before Depreciation, Interest and Taxation (PBDIT) for the year was ` 1913 lacs against ` 5506 lacs in the previous

year. Profit/(Loss) after Taxation (PAT) for the year was ` (5550) lacs against ` 850 lacs in the previous year. Higher

discounts resulting in lower profit margins and higher interest burden have impacted the profits. Other major reasons for

the loss incurred during the year are Exceptional Items aggregating to ` 4,148.14 Lacs i.e provision for diminution in the

value of Investment in unviable business of subsidiary amounting ` 2,898.10 Lacs and written off Goodwill amounting to

` 1,250.04 Lacs during the year. Goodwill was created in the earlier years as an asset representing future economic benefit

upon the demerger of business with the erstwhile parent company, and now, Company does not anticipate any economic

benefit in the future.

DIVIDEND

As no surplus is available in current financial year, your Directors are unable recommend payment of dividend on equity

capital of the Company for the year ended 31st March, 2013.

Directors’ Report

4



OPERATING RESULTS AND BUSINESS

The challenges faced by the Indian organized apparel retail sector are various such as lack of prominent retail space with

real estate prices escalating, slow-down in the economy, shortage of trained manpower, stiff competition from global retail

giants, increase in input and overhead costs and unfavorable scenario during the year.

The Company is facing pressure on margins because of higher costs and discount offers in a competitive market. To ensure

higher earnings, the Company is focusing on reducing various expenses and costs and increasing internal rate of returns by

way of slow and steady growth. The Company is also responding by trying to become leaner and more efficient.

A portfolio comprising brands that cater to various demographic and psychographic profiles would act as an ideal impetus

for creating presence in different geographies across India. Your Company’s strategy of retailing brands with high awareness

quotient and market pull would continue to augment growth and profits.

Brandhouse Oviesse Limited, Subsidiary Company

During the year under review, Company’s subsidiary, Brandhouse Oviesse Limited (BOL) closed down its business in view

of the unviable operations.

As on 31st March 2013, your Company’s equity participation in BOL was ` 2,898.10 Lacs for 2,89,81,030 equity shares

of ` 10/- each representing 58% of BOL’s total paid-up capital of ` 4,996.65 Lacs.

Since BOL is a loss-making company and it has closed down its operations, the Company has made a provision for

diminution in the value of its Investment in BOL.

The audited financials of BOL, could not be received by the Company for consolidation because BOL had been in the

discussion and negotiation with the Franchisor of BOL, for the continuation or otherwise of the Franchisee Agreement

and this has resulted in unforeseen delay and interruption in adoption of audited accounts of BOL in its Board Meeting.

Therefore, the accounts of Subsidiary Company for the current financial year ended on March 31, 2013 could not be

consolidated with the accounts of the Company.

The Management is confident that diminution in the value of investment of its subsidiary will not have any material effect on

the profitability of the Company.

DIRECTORS

During the year, Mrs. Jyoti N. Kasliwal had resigned as a Director from the Board of Directors of the Company with effect

from 24th August, 2012 due to her pre-occupation and family commitments.

Mr. Denys Firth, Nominee Director, India Debt Management Pvt. Ltd. (IDM) withdrew nomination of Mr. Alexander

Shaik as his Alternate Director and appointed Mr. Navin Sambtani in his place as his Alternate Director with effect from

10th November, 2012.

Mr. Jagadeesh S. Shetty, Director Finance (SKNL) & Group CFO was appointed as an additional Non-Executive Director on

the Board with effect from 10th November, 2012 pursuant to section 260, 264 of the Companies Act, 1956. The Company

has received the requisite notice from a member pursuant to Section 257 of the Companies Act, 1956 proposing the

candidature of Mr. Jagadeesh S. Shetty for the office of Director.

Mr. Susheel Kak, Mr. Denys Firth and Mr. Navin Sambtani (Alternate to Mr. Denys Firth) resigned as Directors upon withdrawal

of nomination by India Debt Management Private Limited (IDM) with effect from 10th January, 2013 and IDM has requested

Directors’ Report

5


and reserved the right to attend the Board Meetings as an Observer, until such time IDM re-nominates individuals to the

Board.

Mr. Nitin S. Kasliwal was reappointed as Managing Director for a further period of 5 years i.e from 30th January, 2013 to

29th January, 2018 without payment of any remuneration and subject to approvals of the members and the Central

Government.

Mr. Dara D. Avari had resigned as a Director from the Board of Directors of the Company with effect from 1st March, 2013

due to his preoccupation and advancing age.

In accordance with the provisions of the Companies Act, 1956 and Article 130 of the Articles of Association of the company,

Mr. Vijay G. Kalantri retires by rotation and being eligible, offer himself for re-appointment.

DIRECTORS’ RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information and explanations obtained by them, your

Directors make the following statement in terms of Section 217(2AA) of the Companies Act, 1956.

1. that in the preparation of the Annual accounts for the year ended on 31st March, 2013 the applicable accounting

standards have been followed along with proper explanations relating to material departures, if any;

2. that the Directors have selected such accounting policies and applied them consistently and made judgments and

estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at

the end of the financial year and of profit of the company for the year.

3. that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in

accordance with the provisions of this Act for safeguarding the assets of the company and preventing and detecting

fraud and other irregularities; and

4. that the Directors have prepared the annual accounts for the year ended on 31st March, 2013 on a going concern

basis.

DEPOSITS

Fixed deposits received from shareholders and public stood at NIL as on 31st March, 2013 (previous year ` NIL). The

company does not have any fixed deposit scheme.

PARTICULARS OF EMPLOYEES

Information as per Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules,

1975, as amended, forms part of this Report. However as per the provisions of Section 219(1) (iv) of the Companies Act,

1956 the Reports and Accounts are being sent to the shareholders of the Company excluding the statement of employees

under Section 217(2A) of the Companies Act. Any shareholder interested in obtaining a copy of the said statement may write

to the Secretary at the Registered Office of the company.

CORPORATE GOVERNANCE

As required under clause 49 of the Listing Agreement with the Stock Exchanges, the Report on Corporate Governance

together with the Certificate from the Practising Company Secretary regarding compliance of the provisions of the Corporate

Governance forms part of this Directors’ Report.

Directors’ Report

6



MANAGEMENT DISCUSSION AND ANALYSIS

Management Discussion and Analysis forming part of this Directors’ Report is attached.

PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE

EARNINGS AND OUTFLOW

Your company has no activity relating to Conservation of Energy and Technology absorption as stipulated in the Companies

(Disclosure of Particulars in the Report of Board of Directors) Rules, 1988.

During the year under review, the expenditure of your company in foreign exchange was ` Nil (Previous year ` 39.47 Lacs)

and there was no earning in foreign exchange (Previous year NIL).

AUDITORS

M/s. Haribhakti & Co., Chartered Accountants and M/s. Shyam Malpani & Associates, Chartered Accountants, Joint

Statutory Auditors of the Company, who holds the office upto the conclusion of this Annual General Meeting.

M/s. Shyam Malpani & Associates, being eligible have offered themselves for re-appointment. The other firm of Statutory

Auditors M/s. Haribhakti & Co., have expressed their desire not to seek reappointment in view of their heavy prior professional

commitments.

The Board of Directors, upon the recommendations of the Audit Committee, proposes the reappointment of M/s. Shyam

Malpani & Associates as Statutory Auditors of the Company for conducting the audit of the accounts of the Company to hold

office till the conclusion of the next Annual General Meeting of the Company.

M/s. Shyam Malpani & Associates have furnished the required certificate to the Company, under section 224(1B) of the

Companies Act, 1956 regarding their eligibility for re-appointment as Statutory Auditors of the Company. The necessary

resolution is included in the Notice of the ensuing Annual General Meeting.

In respect of the observations and Emphasis of Matter paragraph made by the Auditors, please refer to Note 29, Note 38

and Note 39 of notes to Financial Statement, which are self-explanatory and hence in the opinion of the Directors, do not

require any further explanation

ACKNOWLEDGEMENT

Your Directors wish to place on record their gratitude to the shareholders of the Company, Banks, Financial Institutions,

valued Customers, suppliers and Business Associates for their support and confidence in the Company. Your Directors

gratefully appreciate the co-operation and assistance extended by various Government Agencies and place on record their

appreciation for unstinted co-operation and assistance extended to your Company by its employees at all levels.

On Behalf of the BoardFor Brandhouse Retails Limited

Nitin S. KasliwalChairman & Managing Director

Place : MumbaiDate : 16th July, 2013

Directors’ Report

7


MANAGEMENT DISCUSSION AND ANALYSIS

ECONOMIC OVERVIEW

Across the world in 2012 the economy remained a worry. Global Gross Domestic Product (GDP) fell to 3.2% compared to

4% in 2011. However, the global economy has shown a lot of resilience and there are strong positives. The global economy

is now moving on to a surer recovery mode. The IMF projects growth at 3.25% in 2013, increasing to 4.0% in 2014. GDP

growth in emerging markets and developing countries is placed at 5.3% in 2013, increasing to 5.7% in 2014.

Developments on the global front, besides the issues at home, undeniably dented India’s growth level.

Slow growth, investor diffidence, the rupee falling to an all-time low and power outages added to the country’s woes. India’s

GDP growth slowed markedly in 2012-13 to 5%, down from 6.2% in the previous year. The manufacturing sector recorded

a growth of only 1.9% in 2012-13, down from 2.7% in 2011-12. Export growth in 2012-13 was 5.1% compared to 15.3%

in the previous year.

In FY 2013-14, GDP growth is projected to rise modestly to around 6% due to revival in consumption, with much of the

improvement likely only in the second half of the year. Industrial activity will continue to be adversely affected by regulatory

bottlenecks.

These developments affect your company’s growth and performance.

INDIAN RETAIL SECTOR

In 2012, Government permitted 51% Foreign Direct Investment in multi brand retail. 100% Foreign Direct Investment in

single brand retail may be allowed to attract investment in this sector which would accelerate the economic growth.

Alongwith investment slowdown, India now faces a challenge of consumption-led slowdown. Consumption demand and

consumption-related sectors have also been impacted by inflation and high interest rates. However, demand seems to be

returning after a tepid start in the first half of this fiscal and may finally show a marginal uptick in the full year.

OPPORTUNITIES, GROWTH, THREATS AND CHALLENGES

Despite the current gloomy outlook, India is the third largest market in the world in terms of purchasing power. The steady

increase in spending with earnings is a strong source of opportunity. In the coming years, manufacturers and retailers of

consumer goods can expect a major boost in consumption. Aggregation of demand that occurs due to urbanization helps

a retailer in reaping the economies of scale.

With the relaxation of Foreign Direct Investment (FDI) policy in retail sector, many foreign investors are also showing keen

interest to enter into the Indian market. To become a flourishing industry, the Indian retail sector has to attract leading Indian

and foreign players to make substantial investments.

Some of the challenges the industry is facing and needs to overcome are:

l Shortage of skilled workforce prevails in the retail sector.

l Retail majors are under serious pressure to improve their supply chain systems and reach the levels of quality and

service desired by customers.

l The lack of proper infrastructure and distribution channels in the country results in inefficient processes.

Management Discussion and Analysis

8


9TH ANNUAL REPORT 2012-13 Management Discussion and Analysis

l Insufficient and inefficient power supply to organized retail outlets makes it difficult for the sector to grow.

l High cost of real estate.

l Unhealthy competition from unorganized sector.

COMPANY’S RETAIL BUSINESS

Reid & Taylor

Reid & Taylor (R&T) is Company’s brand offering in the premium suiting and garment segment. R&T has approximately 24%

of the market share for worsted suiting and fabrics and is rated amongst the top two brands for premium clothing.

Belmonte

Belmonte is Company’s brand offering in the mid premium segment that offers fabrics as well as garments retailed by the

Company through a pan-India network. Belmonte offers fabric, suiting and ready-to-wear clothing and is a brand ideal for

consumers who are both fashion and value conscious. The brand is very popular and is fast catching up the fancy of the

middle lever buyer.

Carmichael House

Carmichael House is the brand that offers premium and mid-premium home textiles by S. Kumars Nationwide Limited. The brand offers a complete range of high quality home textiles including bed linen, towels, duvet covers and upholstery.

Oviesse Joint Venture

The Company’s joint venture with Oviesse S.p.A Italy under the name of Brandhouse Oviesse Limited, established in 2009, offering quality fashionable apparel for men, women and children at affordable prices under the brand “OVS” failed to take off, especially in a recessionary market and with very limited stores outlets. Additionally, the joint venture company’s plans for local sourcing did not come off which put continued pressure on margins. The joint venture partners have reluctantly decided to discontinue the franchise agreement and the business operations. Negotiations are on with the erstwhile partners to sort out the financial and administrative issues to bring about a final closure.

OUTLOOK

“Reid & Taylor” and “Belmonte” remain key contributors to the overall performance of the Company. With the vastly limited product range at the Company’s disposal and the slowness in opening more outlets because of finance and other considerations, growth in sales turnover and earnings for the Company are dependent largely, on improving consumer sentiment and a continued demand growth. Hopefully as the economy turns for the better, the Company has the potential and ability to take advantage in the marketplace.

RISKS & CONCERN

The Company considers good Corporate Governance as a pre-requisite for meeting the needs and aspirations of its shareholders and other stakeholders in the Company. As part of the Company’s efforts to strengthen Corporate Governance, the Board of Directors have formulated Risk Management Policy, which puts in place a risk management structure with clear definition of roles and responsibilities, as well as a risk portfolio involving a continuous process of risk identification, risk assessment, control assessment and risk monitoring, review and communication. The Company aims to:

- Identify, assess and manage existing as well as new risks in a planned and coordinated manner.

- Increase the effectiveness of its internal and external reporting structure.

9


Management Discussion and Analysis

INTERNAL CONTROL SYSTEMS AND ADEQUACY

The Company is adhering to a system of internal controls for financial reporting of transactions and compliance with relevant laws and regulations commensurate with its size and nature of business. The Company also has a well-defined process for ongoing management reporting, and periodic review of businesses so as to ensure alignment with strategic objectives.

The internal audit function is carried out partly by internal resources and the balance activity is outsourced to Chartered Accountant firms. As part of the effort to evaluate the effectiveness of the internal control systems, the Internal Audit department reviews the control measures on a periodic basis and recommends improvements, wherever appropriate. The Internal Audit department reports directly to the Audit Committee of the Board. The Audit Committee regularly reviews the audit findings as well as the adequacy and effectiveness of the internal control measures. Based on their recommendations, the Company has been implementing a number of control measures both in operational and accounting related areas, apart from security related measures.

FINANCIAL PERFORMANCE ANALYSIS

Revenues

In the Financial Year 2012-13, your Company’s revenues grew modestly by 4% to ` 814.86 crore due to improved store sales and better volumes achieved.

Expenditure

Total expenditure during the period under review, excluding interest, increased by 8.72% to ` 802.61 crore from ` 738.25 crore last year. Total expenditure has increased due to rise in cost of raw materials and Company has written off stores deposits.

During the year under review the Company is trying to use its resources in very optimum manner and to reduce and control the costs.

Interest Cost

Interest Cost for the financial year 2012-13 is higher at ` 39.62 crore as compared to ` 29.92 crore in the previous year due to enhancement in the rate of interest in general and payment of overdue interest etc.

EBIDTA & NET PROFIT/LOSS

During the year under review, EBIDTA stood at ` 19.13 crore as compared to ` 55.06 crore in the previous year and the

Company has incurred loss of ` 55.50 crore in comparison to profit ` 8.50 crore in the previous year due to lower profit margins, higher burden of interest, diminution in the value of investment and written off goodwill.

CAUTIONARY STATEMENT

Statements made in this report in describing the Company’s objectives, projections, estimates, expectations or predictions may be “forward-looking statements” within the meaning of applicable securities laws and regulations. Forward-looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realized by the Company. Actual results could differ materially from those expressed in the statement or implied due to the influence of external and internal factors, which are beyond the control of the Company. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking

statements on the basis of any subsequent developments, information or events.

10



REPORT ON CORPORATE GOVERNANCE

COMPANY’S PHILOSOPHY ON CORPORATE GOVERNANCE

Company’s philosophy of corporate governance stems from its belief of transparency, integrity and accountability towards all

stockholders. Corporate Governance helps to achieve excellence to enhance stakeholders’ value by focusing on long- term

stakeholder value creation without compromising on integrity, social obligation and regulatory compliances.

Company’s continuous endeavour has been to achieve good governance, by way of a conscious and conscientious effort to

ensure transparency, accountability and responsibility in all its dealings with the stakeholders, consumers and the community

at large.

The following report on the implementation of the Corporate Governance requirements under clause 49 of the Listing

Agreement with the stock exchanges illustrates the efforts of the Company in having followed the Corporate Governance

principles, both, in their letter and spirit.

COMPLIANCE WITH CLAUSE 49 OF THE LISTING AGREEMENT

The Company’s Report on Corporate Governance under clause 49 of the Listing Agreement is as under:

1. BOARD OF DIRECTORS

A. Composition of the Board:

As on 31st March, 2013, the Company’s Board comprised of three Directors, of which one is Independent Director,

one is Executive Promoter Director and one is Non-Executive Non-Independent Director. The composition of the

Board is given below.

Name of the

Director

Designation Promoter /

Non-Promoter

Executive /

Non-Executive

Independent /

Non-IndependentMr. Nitin S. Kasliwal Chairman &

Managing Director

Promoter Executive Non-Independent

Mr. Vijay Kalantri Director Non-Promoter Non-Executive IndependentMr. Jagadeesh S.

Shetty*

Director Non-Promoter Non-Executive Non-Independent

*Appointed with effect from 10th November, 2012 as Non-Executive Non-Independent Director.

In view of the resignations of some of the independent directors in the last quarter of the year under review, the composition of the Board of Directors is not in accordance with the requirements of clause 49 of the Listing Agreement. The Company is in the process of setting right the composition of the Board of Directors in line with clause 49 of the Listing Agreement by appointing independent director/s.

B. Number of Board Meetings:

The Board of Directors met four (4) times during the year on 30th May, 2012, 14th August, 2012, 10th November,

2012 and 14th February, 2013. The maximum time gap between any two consecutive Board Meetings did not

exceed four months.

Attendance of the Directors at the Board Meetings and at the last AGM of the Company and details of their

Directorships and membership of Committees in other Companies:

Report on Corporate Governance

11


Name of Director Board

Meetings

Attended

Attendance in Last

AGM held on 27th

September, 2012

No. of Directorships

in other Public

Limited Companies*

No. of

Committees#

Chairman Member

Mr. Nitin S. Kasliwal 3 Yes 3 - -

Mr. Vijay Kalantri 4 No 14 1 7

Mr. Jagadeesh S. Shetty1 2 N.A 2 - -

Mrs. Jyoti N. Kasliwal2 - N.A N.A N.A N.A

Mr. Dara D. Avari3 4 Yes N.A N.A N.A

Mr. Susheel Kak4 3 No N.A N.A N.A

Mr. Denys Firth5 - No N.A N.A N.A

Mr. Alexander Shaik6 1 No N.A N.A N.A

Mr. Navin Sambtani7 & 8 1 No N.A N.A N.A

* Excludes Private Limited Companies, Foreign Companies and Section 25 Companies.

# Committees include Audit Committee and Investors’ Grievance Committee of the Board.

1 - Appointed as Director with effect from 10th November, 2012

2 - Ceased to be Director with effect from 24th August, 2012.

3 - Ceased to be Director with effect from 1st March, 2013.

4 & 5 - Ceased to be Directors with effect from 10th January, 2013.

6 - Ceased to be Alternate Director to Mr. Denys Firth with effect from 10th November, 2012.

7 - Appointed as Alternate Director to Mr. Denys Firth with effect from 10th November, 2012.

8 - Ceased to be Alternate Director to Mr. Denys Firth with effect from 10th January, 2013.

All the Directors have made necessary disclosures about the committee positions they occupy in other Companies.

The Company has not entered into any materially significant transaction during the year under review with Promoters,

Directors, Senior Management Personnel etc. other than transactions, if any, entered into in the normal course of

Company’s business.

The Company’s Board of Directors play primary role in ensuring good governance and functioning of the Company.

The Board’s role, functions, responsibility and accountability are clearly defined. The relevant information barring in

some cases as specified in Annexure 1A to Clause 49 of the Listing Agreement is regularly placed before the Board.

Agenda and Notes on Agenda are circulated to the Directors in advance of each meeting of the Board of Directors.

Where it is not practical to attach or send the relevant information as part of agenda papers, the same are tabled

at the meeting and the presentations are made to the Board. The Members of the Board have complete freedom to

express their opinion and the decisions are taken after detailed discussions. The Board is still in the process of

reviewing periodically the compliances of all laws, rules and regulations applicable to the Company.

The Board meets at least once in a quarter to review the quarterly financial results and operations of the Company.


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In accordance with the provisions of the Companies Act, 1956 and Article 130 of the Articles of Association of the

Company, Mr. Vijay G. Kalantri, is due to retire by rotation at the ensuing annual general meeting of the Company

and being eligible, offers himself for re-appointment.

C. Code of Conduct:

The Company has laid down a Code of Conduct for all Board Members and Senior Management Personnel of the

Company which is posted on the Company’s website. All the Board members and Senior Management Personnel

have affirmed compliance with the said Code of Conduct as applicable to them for the Financial Year ended on

31st March, 2013. A declaration to this effect given by Managing Director of the Company is attached to this report.

D. Code on Insider Trading:

The Company has framed a Code on Prevention of Insider Trading in accordance with the code prescribed under SEBI

(Prohibition of Insider Trading) Regulations, 1992. The Code is applicable to all Directors, Senior Management and

Designated Employees of the Company. By its terms, all Directors, Senior Management and Designated Employees

are restricted from dealing in the shares of the Company during the restricted periods notified by the Company

from time to time.

2. AUDIT COMMITTEE

A. Composition of Audit Committee

The Company has an Audit Committee at the Board level, with the powers and the role that are in accordance with

the Clause 49II (C) and (D) of the Listing Agreement and section 292A of the Companies Act, 1956, which acts as

a link between the management, the Statutory and Internal Auditors and the Board of Directors and oversees the

financial reporting process of the Company.

During the year under review, Mr. Susheel Kak and Mr. Dara D. Avari ceased to be the members of the Audit

Committee with effect from 10th November, 2012 and 1st March, 2013 respectively following their resignation

from the Committee/Board. The Audit Committee of the Company was re-constituted on 14th February 2013 with

induction of Mr. Jagadeesh S. Shetty as its member. As on 31st March, 2013, the Audit Committee of the Board of

Directors of the Company comprised of two members, Mr Vijay G. Kalantri, Independent Director as the Chairman

of the Audit Committee and Mr. Jagadeesh S. Shetty, Non Executive & Non Independent Director as member of the

Audit Committee.

In view of the resignation of one of the independent directors in the last quarter of the year under review, the

composition of the Audit committee is not in accordance with the requirements of clause 49 of the Listing Agreement.

The Company is in the process of setting right the composition of the Audit Committee in line with clause 49 of

the Listing Agreement. The members of the Audit Committee have knowledge in general on financial matters. The

Statutory Auditors, Internal Auditors and head of the finance department of the Company are also invited to the

Audit Committee Meetings.

The Company Secretary acts as the Secretary to the Audit Committee.


13


B. Meetings of Audit Committee

During the year under review, the Audit Committee met four (4) times on 30th May, 2012, 14th August, 2012,

10th November, 2012 and 14th February, 2013. The details of the composition and attendance by the Committee

members are as follows:

Name of Director Independent /

Non-Independent

Designation Meetings Attended

during the year

Mr. Vijay Kalantri Independent Chairman 4

Mr. Jagadeesh S. Shetty1 Non-Independent Member N.A

Mr. Susheel Kak2 Independent Member 2

Mr. Dara D. Avari3 Non-Independent Member 4

1. Appointed as member of Audit Committee with effect from 14th February, 2013.

2. Ceased to be Member and Director with effect from 10th November, 2012 and 10th January, 2013. Respectively.

3. Ceased to be Member and Director with effect from 1st March, 2013.

As stipulated under clause 49 of the Listing Agreement, at each of the meetings of the Audit Committee, the requisite

quorum of two members or one third of the members of the Audit Committee, whichever is greater, subject to a

minimum of two independent members was present, except for the Audit Committee Meetings held on 10th November, 2012 and 14th February, 2013 where only one independent member was present.

The Chairman of the Audit Committee was not present at the 8th Annual General Meeting of the company held on 27th September 2012 as he was out of city.

C. Terms of Reference

The terms of reference of the Audit Committee are in accordance with all the items listed in Clause 49 II (D) and (E)

of the Listing Agreement as follows:

a) Oversight of the Company’s financial reporting process and the disclosure of its financial information to ensure

that the financial statements are correct, sufficient and credible.

b) Recommending to the Board, the appointment, re-appointment and, if required, the replacement or removal

of the Statutory Auditor and the fixation of Audit Fees.

c) Approval of payment to Statutory Auditors for any other services rendered by the Statutory Auditors.

d) Reviewing, with the management, the annual financial statements before submission to the Board for approval.

e) Reviewing, with the management, the quarterly financial statements before submission to the Board for approval.

f) Reviewing, with the management, performance of the Statutory and Internal Auditors, and adequacy of the

internal control systems.

g) Reviewing the adequacy of internal audit function, if any, including the structure of the Internal Audit department,

staffing and seniority of the official heading the department, reporting structure, coverage and frequency of

Internal Audit.


14



h) Discussing and reviewing with the Internal Auditors any significant findings, its reporting to the Board and follow

up thereon.

i) Reviewing the findings of any internal investigations by the Internal Auditors into matters where there is suspected

fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the

Board.

j) Discussion with Statutory Auditors before the audit commences, about the nature and scope of audit as well as

post-audit discussion to ascertain any area of concern.

k) Looking into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders

(in case of non-payment of declared dividends) and creditors.

l) Carrying out any other function as is mentioned in the terms of reference of the Audit Committee.

m) Reviewing significant related party transactions.

3. REMUNERATION COMMITTEE

The Remuneration Committee deals with the matters specified in Clause 49 of the Listing Agreement and also reviews

the overall compensation structure and policies of the Company. The Chairman of the Remuneration Committee

is an Independent Director. During the year under review, the Remuneration Committee Meeting was held once on

29th January, 2013 to recommend re-appointment of Mr. Nitin S. Kasliwal as Managing Director for a further period of

5 years i.e from 30th January, 2013 to 29th January, 2018 without payment of any remuneration and subject to approvals

of the members and Central Government.

During the year under review, the Remuneration Committee of the Board of Directors of the Company was re-constituted

on 14th February, 2013 for induction of Mr. Jagadeesh S. Shetty as its member. The Constitution and attendance of the

members of the Remuneration Committee is as under:

Name of Director Designation Meetings Attended during the year

Mr. Vijay Kalantri Chairman 1

Mr. Jagadeesh S. Shetty1 Member N.A.

Mr. Susheel Kak2 Member N.A.

Mr. Dara D. Avari3 Member 1

1. Appointed as member of Remuneration Committee with effect from 14th February, 2013.

2. Ceased to be Director with effect from 10th January, 2013.

3. Ceased to be Director with effect from 1st March, 2013.

Remuneration paid to the Directors:

(A) The Non-Executive Directors of the Company do not draw any remuneration from the Company except sitting fees

for the meetings of the Board of Directors, Audit Committee and Committee of Directors attended by them.


15


The details of sitting fees paid to the non-executive directors for the financial year 2012-13 are as under:

(In `)

Name of the Director

Sitting Fees for the Financial Year 2012-13 Total

Board Meeting Audit

Committee

Committee of

Directors

Mr. Nitin S. Kasliwal N.A. N. A. N. A. -

Mr. Vijay Kalantri 80,000 80,000 40,000 2,00,000

Mr. Jagadeesh S. Shetty1 20,000 - - 20,000

Mrs. Jyoti N. Kasliwal2 - - - -

Mr. Dara D. Avari3 80,000 80,000 40,000 2,00,000

Mr. Susheel Kak4 60,000 40,000 - 1,00,000

Mr. Denys Firth5 - - - -

Mr. Alexander Shaik6 20,000 - - 20,000

Mr. Navin Sambtani7 & 8 20,000 - - 20,000

1 - Appointed as Director with effect from 10th November, 2012

2 - Ceased to be Director with effect from 24th August, 2012.

3 - Ceased to be Director with effect from 1st March, 2013.

4 & 5 - Ceased to be Directors with effect from 10th January, 2013.

6 - Ceased to be Alternate Director to Mr. Denys Firth with effect from 10th November, 2012.

7 - Appointed as Alternate Director to Mr. Denys Firth with effect from 10th November, 2012.

8 - Ceased to be Alternate Director to Mr. Denys Firth with effect from 10th January, 2013.

(B) The details of remuneration paid to the executive directors for the financial year 2012-13 are as follows:

(In `)

Name /

Designation

Tenure of Office

during the

Financial Year

Salary Perquisites incl

contribution to

Provident Fund

Incentives

etc.

Total

Mr. Nitin S. Kasliwal,

Chairman & Managing Director *

1st April, 2012 to

31st March, 2013 Nil Nil Nil Nil

* Earlier Appointed as Managing Director of the Company from 30th January, 2010 to 29th January, 2013 without

payment of any remuneration and Re-appointed for a further period of 5 years i.e from 30th January, 2013 to

29th January, 2018, subject to the approvals of members and central government.

Notice period for termination of appointment of Managing Director is two months.

The Company does not have a scheme for grant of Stock Options.


16



(C) Shareholding of the Directors in the Company as on 31st March, 2013

Name of DirectorAs on 31st March, 2013

Number of Shares %

Mr. Nitin S. Kasliwal 296,490 0.55

Mr. Jagadeesh S. Shetty 400 0.00

TOTAL 2,96,890 0.55

4. TRANSFER & SHAREHOLDERS’/INVESTORS’ GRIEVANCE COMMITTEE

The Transfer & Shareholders’/Investors’ Grievance Committee of the Board was constituted on 17th June, 2008 with the

following terms of reference:

a) Approving transfer(s), transmission(s) and transposition(s) of the shares held in physical form.

b) Approving sub-division / consolidation of Share Certificates, subject to marketable lot size.

c) Approving dematerialisation / rematerialisation requests.

d) Redressing any other grievances / queries of the shareholders / investors not mentioned above which it may deem

fit.

e) Reviewing statutory compliances falling under shares related activities.

During the year under review, the Transfer & Shareholders’/Investors’ Grievance Committee of the Board of Directors

of the Company was re-constituted on 14th February, 2013 for induction of Mr. Jagadeesh S. Shetty as its member.

Mr. Dara D. Avari ceased to be member of the said Committee following his resignation from the Company with effect

from 1st Match, 2013.

A total of 5 meetings of the Transfer & Shareholders’/Investors’ Grievance Committee were held during the year under

review on 30th April, 2012, 16th July, 2012, 8th October, 2012, 14th January, 2013 and 7th February, 2013. The composition

of the Committee and the number of meetings attended by the members are as follows:

Name of Director Designation Meetings Attended

Mr. Vijay Kalantri Chairman 5


Mr. Jagadeesh S. Shetty2 Member N.A


2. Appointed as member with effect from 14th February, 2013

Mr. Dipesh U. Gosar, Company Secretary is the Compliance Officer of the Company.

One complaint was received during the financial year under reporting. No complaint was pending as on 31st March,

2013. No requests for transfers were pending for approval as on 31st March, 2013.

5. COMMITTEE OF DIRECTORS

A Committee of the Board of Directors of the Company was constituted at the meeting of the Board of Directors held

on 30th January, 2010.

Three meetings of Committee of Directors were held during 2012-13.


17


Composition of the Committee of Directors is given below:

Name of Director Designation Meetings Attended

Mr. Nitin S. Kasliwal Chairman 3

Mr. Vijay Kalantri Member 2



6. GENERAL BODY MEETINGS

Annual General Meetings

The details of the last three Annual General Meetings held are as follows:

Year AGM Date and Time of AGM Venue

2009-2010 6th 28th September, 2010 at 4:30 p.m. Walchand Hirachand Hall, Indian Merchants’ Chamber

Building, IMC Marg, Churchgate, Mumbai – 400020





Special Resolutions passed in the last three Annual General Meetings are as follows:

AGM AGM Date Special Resolutions passed for:

6th 28th September, 2010 Appointment of Mr. Nitin S. Kasliwal as Managing Director, without payment of any

remuneration, for a period of three (3) years with effect from 30th January, 2010

pursuant to Sections 269 and 316 of the Companies Act, 1956

7th 28th September, 2011 Nil

8th 27th September, 2012 Payment of remuneration to Ms. Anjani N. Kasliwal as Vice President of the Company

pursuant to Section 314(1B) of the Companies Act, 1956

Extra Ordinary General Meetings

During last three financial years, no Extra-Ordinary General Meeting of the members of the Company was held:

Postal Ballot

During the Financial Year under review, no Postal Ballot was conducted. None of the items to be transacted at the ensuing

Annual General Meeting is required to be passed by postal ballot.

7. SUBSIDIARIES:

The Company has one subsidiary, namely Brandhouse Oviesse Limited incorporated on 29th July, 2009 under the Companies Act, 1956, which is a Joint Venture Company of the Company and Oviesse S.p.A. (Now GruppoCoin), Italy. As on 31st March, 2013, the Company holds 58% shares in the subsidiary company.

Material Non-Listed Indian Subsidiary: The revised Clause 49 defines a ‘Material Non-Listed Indian Subsidiary’ as an unlisted subsidiary, incorporated in India, whose turnover or net worth (i.e. paid-up capital and free reserves) exceeds 20% of the consolidated turnover or net worth respectively, of the listed holding Company and its subsidiaries in the immediately preceding accounting year. Therefore, the Company does not have any Material Non-Listed Indian Subsidiary.


18



The Subsidiary commenced its operations during the Financial Year 2010-11. The minutes of the Board Meetings of the subsidiary except subsidiary’s standalone financial statements are being placed from time to time before the meeting of the Board of Directors. Now, Brandhouse Oviesse Limited has taken effective steps to close down its business operations in view of the unviable operations.

Therefore, the Company has made a provision for diminution in the value of its investment in the subsidiary company.

8. DISCLOSURES:

a) Disclosure regarding materially significant related party transaction

There are no materially significant related party transactions which have potential conflict with the interest of the Company at large. As the transactions with related parties are disclosed separately under Notes to Accounts in this Annual Report, the same are not reviewed separately at the Audit Committee.

b) Details of Non-Compliance of statutory provisions of capital market

The Company has complied with all statutory provisions of regulatory authorities. No penalties or strictures have been imposed on the Company by any Stock Exchange or SEBI or any other statutory authority on any matter related to capital market during the last three years.

c) Compliance of Clause 49 of the Listing Agreement

The compliance with the mandatory requirements of Clause 49 of the Listing Agreement by the company is subject to statements as made herein. Certification by CEO and CFO about the true & fairness of the accounts and financial statements of the Company for the year ended 31st March, 2013 has been duly received and was placed before the Board Meeting held on 16th July, 2013 for approving the accounts for the year ended on 31st March, 2013.

d) Risk Management

The Company has formulated a Risk Management Policy and it is yet to be reviewed periodically by the Board.

e) Disclosure of relationship between Directors inter-se

As on 31st March, 2013, no Director is related to any other Director.

f) Management

The Management Discussion and Analysis Report forms part of this Annual Report.

Clause 49 of the Listing Agreement mandates to obtain a certificate from either the Auditors or Practising Company Secretary regarding compliance of conditions of corporate governance stipulated in the clause and annex the certificate with the Directors’ Report, which is sent annually to all the shareholders. The Company has obtained a certificate from the Practising Company Secretary to this effect and the same is given as an annexure to the Directors’ Report.

g) Proceeds from Issues, if any

Not Applicable

9. MEANS OF COMMUNICATION:

The Company has been promptly communicating any material developments in the Company to the shareholders.

During the year, the financial results of the Company were published as follows:

Period Date of the Board Meeting

Date of publishing Newspapers

Audited Financial Results for the Financial Year 2011-12

30th May, 2012 1st June, 2012 The Free Press Journal & Navashakti

Unaudited Financial Results for the Quarter ended 30th June, 2012 (Q1)

14th August, 2012 16th August, 2012 The Free Press Journal & Navashakti


19


Period Date of the Board Meeting

Date of publishing Newspapers

Unaudited Financial Results

for the Half Year ended

30th September, 2012 (H1)

10th November, 2012 13th November, 2012 The Free Press Journal & Navashakti

Unaudited Financial Results

for the Quarter ended

31st December, 2012 (Q3)

14th February, 2013 16th February, 2013 The Free Press Journal & Navashakti

All material information including financials, presentations, press releases, corporate updates, shareholders information

communicated to BSE, NSE is available on the respective websites of BSE and NSE and also on the website of the

Company http://brandhouseretails.com.

10. GENERAL SHAREHOLDERS INFORMATION:

10.1 Annual General Meeting

Date, Time and Venue:

Monday, 28th April, 2014, at 12.00 noon. at Hall of Harmony, Nehru Centre Conference Hall, Dr. Annie Besant Road,

Worli, Mumbai 400 018.

10.2 Financial Year

1st April to 31st March

Tentative Financial Calendar for the Financial Year 2013-14 is as follows:

Financial Results for the Quarter ended on 30th June, 2013 30th August, 2013

Financial Results for the Quarter / Half year ending on 30th September, 2013 14th November, 2013

Financial Results for the Quarter / Nine months ending on 31st December, 2013 14th February, 2014

Financial Results for the Quarter / Year ending on 31st March, 2014 (Audited Results) By 30th May, 2014

10.3 Date of Book Closure

Wednesday 23rd April, 2014 to Monday, 28th April, 2014 (both days inclusive)

10.4 Dividend Payment Date

The Company has not declared / proposed any interim / final dividend for the financial year ended on 31st March, 2013.

10.5 Listing on Stock Exchanges

Bombay Stock Exchange Limited (BSE)

Phiroze Jeejeebhoy Towers,

Dalal Street,

Mumbai - 400 001

National Stock Exchange of India Limited (NSE)

Exchange Plaza, Bandra - Kurla Complex,

Bandra (East),

Mumbai 400 051

The requisite Listing Fees for the financial year 2013 -14 have been duly paid to BSE & NSE.


20



10.6 Stock Code & ISIN for the equity shares of the Company

BSE Scrip Code: 533059 NSE Symbol: BRANDHOUSE

ISIN for the equity shares of the Company: INE317J01011

10.7 Market Price Data:

Monthly share price movement on BSE & NSE during the Financial Year 2012-13 was as below:

Month

BSE NSE

High Low Volume of shares

traded

High Low Volume of shares

traded

April 2012 14.90 12.00 1,53,477 15.00 11.75 5,08,260

May 2012 14.90 10.10 2,44,192 13.60 10.90 5,62,147

June 2012 17.00 11.30 5,75,946 17.05 11.15 14,31,327

July 2012 16.50 12.85 6,94,587 16.90 12.75 15,19,224

August 2012 14.45 12.25 2,82,205 14.40 12.20 6,41,644

September 2012 15.95 12.00 4,52,202 15.90 11.50 11,33,969

October 2012 17.59 12.31 10,99,914 17.60 12.45 24,05,170

November 2012 15.30 12.70 5,59,934 15.30 12.60 15,60,318

December 2012 18.00 13.06 15,64,525 18.40 13.00 34,91,260

January 2013 14.30 11.15 4,60,593 14.25 11.60 10,38,043

February 2013 12.70 9.35 3,24,643 12.70 9.15 8,01,222

March 2013 10.10 4.02 9,15,334 10.00 4.10 12,76,432

10.8 Registrar & Transfer Agent

Datamatics Financial Services Limited

Plot No. B-5, Part B Crosslane,

MIDC Marol, Andheri (East),

Mumbai 400 093

Tel: +91-22-66712175

Fax: +91-22-66712161

E-mail: [email protected]

10.9 Share Transfer System

The Company together with its RTA ensures prompt disposal of all the requests for transfer / transmission /

transposition of equity shares of the Company. Usually, the requests received with proper documentation are

cleared within 15 days from their lodgement. The requests with incomplete / improper documentation are sent

back within 15 days from lodgement.


21


10.10 Shareholding Pattern

Category of ShareholderAs on 31st March, 2013

Number of Shares %

Promoters 2,72,08,580 50.76

Mutual Funds/UTI 880 0.00

Financial Institutions / Banks 640 0.00

Foreign Institutional Investors (FIIs) 0 0.00

Bodies Corporate 1,21,16,389 22.60

Individuals 1,34,98,521 25.18

Non Residents 7,77,757 1.46

TOTAL 5,36,02,767 100.00

Distribution of holdings

Shares Range As on 31st March, 2013

From - To Number of

Shares

% To Capital No. of

shareholders

% to no. of

shareholders

1 – 500 2245948 4.19 22197 85.43

501 – 1,000 1482529 2.77 1740 6.70

1,001 – 2,000 1447632 2.70 903 3.48

2,001 – 3,000 886207 1.65 340 1.31

3,001 – 4,000 630047 1.18 176 0.68

4,001 – 5,000 803155 1.50 168 0.65

5,001 – 10,000 1704443 3.18 228 0.88

10,001 – 50,000 3766615 7.03 191 0.74

50,001 & above 40636191 75.81 40 0.15

53602767 100.00 25983 100.00

10.11 Dematerialisation of shares and liquidity

The equity shares of the Company are admitted into the depository system of NSDL & CDSL and the ISIN allotted

is INE317J01011. The Company together with RTA ensures that all dematerialisation and rematerialisation

requests received from the depository participants are disposed of within 15 days of receipt of request. The

trading of the equity shares of the Company, both on BSE & NSE, is compulsorily to be in the dematerialised form.

As on 31st March, 2013, 4,71,35,524 equity shares aggregating 87.94% of the total equity shares of the

Company were held in demat form.

10.12 Outstanding GDR/ ADR/ Warrants or any Convertible instruments, conversion date and likely

impact on equity

The Company has not issued any GDR/ ADR/ Warrants or any other instruments to be converted into equity shares.


22



10.13 Plant Locations / Registered Office

Registered Office:

Brandhouse Retails Limited

B-2, 5th Floor, Marathon NextGen,

Off G. K. Marg, Lower Parel,

Mumbai – 400 013

Tel: +91-22-24824500

Fax:+91-22-24930378

E-mail: [email protected]

Website: http://brandhouseretails.com

10.14 Address for correspondence

The shareholders may contact the Company / RTA on the following addresses:

General Correspondence: Correspondence related to shares / queries / requests:

Brandhouse Retails Limited Datamatics Financial Services Limited

B-2, 5th Floor, Marathon NextGen, Plot No. B-5, Part B Crosslane,

Off G. K. Marg, Lower Parel, Mumbai – 400 013

MIDC Marol, Andheri (East),Mumbai - 400 093

Tel: +91-22-24824500 Tel: +91-22-66712175

Fax: +91-22-24930378 Fax: +91-22-66712161

Website: http://brandhouseretails.com Website: http://www.dfssl.com

e-mail ID for investors grievances: [email protected]

10.15 Evolution of Issued, Subscribed and Paid-Up Equity Share Capital as on 31st March, 2013

Date Particulars

(In No. of Shares) (In `)Opening Balance

Increase / (Decrease)

Closing Balance

Opening Balance

(`)

Increase / (Decrease)

(`)

Closing Balance

(`)4th June, 2004

Incorporation 0 10,000 10,000 0 1,00,000 1,00,000

24th January, 2006

Allotment to S. Kumars Nationwide Limited

10,000 9,90,000 10,00,000 1,00,000 99,00,000 1,00,00,000

14th September, 2007

Allotment to Sansar Exim Private Limited

10,00,000 53,00,000 63,00,000 1,00,00,000 5,30,00,000 6,30,00,000

23rd July, 2008

Allotment under the Scheme of Arrangement

63,00,000 4,73,02,767 5,36,02,767 6,30,00,000 47,30,27,670 53,60,27,670


23



11. Non Mandatory Requirement:

As stated above the Board has already constituted a Remuneration Committee. As regards Whistle Blower Policy, all employees have access to the Audit Committee.

DECLARATION BY THE MANAGING DIRECTOR UNDER CLAUSE 49 I(D) OF THE LISTING AGREEMENT REGARDING ADHERENCE TO THE COMPANY’S CODE OF CONDUCT

This is to confirm in accordance with Clause 49 I(D) of the Listing Agreement with the Stock Exchanges that all Directors and Senior Management of the Company have affirmed compliance with the Code of Conduct laid down by the Company

as applicable to them for the Financial Year ended on 31st March, 2013.

For Brandhouse Retails Limited

Nitin S. KasliwalChairman & Managing Director

Date : 16th July, 2013

Place : Mumbai

24



PRACTISING COMPANY SECRETARIES’ CERTIFICATE ON CORPORATE GOVERNANCE

To the Members of

Brandhouse Retails Limited

We have examined the compliance of conditions of Corporate Governance by Brandhouse Retails Limited for the year ended

on March 31, 2013, as stipulated in clause 49 of the Listing Agreement of the said Company with the Stock Exchanges.

The compliance of conditions of Corporate Governance is the responsibility of the Company’s management.

Our examination was limited to procedures and implementation thereof adopted by the company for ensuring the compliance

of the conditions of Corporate Governance. It is neither an audit nor an expression of opinion of the financial statements

of the company.

In our opinion and to the best of our information and according to the explanations given and representations made to

us and subject to the highlighted statements made by the management in the Corporate Governance report, we certify

that the Company has generally complied with the conditions of corporate governance as stipulated in Clause 49 of the

abovementioned Listing Agreement.

We further state that such compliance is neither an assurance as to the future viability of the company nor of the efficiency

or effectiveness with which the management has conducted the affairs of the company.

For Parikh & Associates

Practising Company Secretaries

P. N. Parikh

FCS: 327 CP: 1228

Mumbai

Dated: 16th July, 2013


25


(` in Lacs)

Particulars 31.03.2009 31.03.2010 31.03.2011 31.03.2012 31.03.2013

(A) SOURCES OF FUNDS

(ai) Shareholders' Funds

Share Capital (Equity Shares of ` 10/- each) 5,360.28 5,360.28 5,360.28 5,360.28 5,360.28

Reserves and Surplus 5,841.57 7,123.53 8,975.01 9,795.33 4,245.46

TOTAL (ai) 11,201.85 12,483.81 14,335.29 15,155.61 9,605.74

(aii) Loan Funds

Secured Loans 10,155.44 18,757.54 17,949.59 18,627.43 22,597.71

TOTAL (A) (ai+aii) 21,357.29 31,241.36 32,284.88 33,783.04 32,203.45

(B) APPLICATION OF FUNDS

(bi) Fixed Assets

Gross Block 6,488.28 6,702.65 6,760.52 6,728.09 5,431.65

Less : Depreciation/Amortisation 1,321.49 2,172.30 3,160.26 4,093.69 4,737.23

Net Block 5,166.79 4,530.34 3,600.26 2,634.40 694.42

Add : Capital Work in Progress (incl. Capital Advances)

89.71 28.38 28.05 11.06 -

TOTAL (bi) 5,256.50 4,558.72 3,628.31 2,645.46 694.42

(bii) Investments - 5.00 1,280.70 2,898.10 -

(biii) Deferred Tax Assets 32.38 52.11 40.99 200.17 -

(biv) Current Assets, Loans & Advances

Inventories 13,958.04 19,521.99 21,355.09 19,765.88 28,234.84

Sundry Debtors 21,881.24 26,835.02 24,600.37 26,958.65 37,182.87

Cash & Bank balances 307.42 54.27 42.58 18.99 21.02

Loans & Advances 5,389.60 5,479.92 3,741.86 3,519.86 814.92

Total Current Assets, Loans & Advances (i) 41,536.30 51,891.21 49,739.90 50,263.38 66,253.65

Less : Current Liabilities & Provisions

Current Liabilities 22,564.02 20,500.90 20,355.60 19,324.67 34,686.03

Provisions 2,903.87 4,764.79 2,049.42 2,899.40 58.59

Total Current Liabilities & Provisions (ii) 25,467.89 25,265.69 22,405.02 22,224.07 34,744.62

Net Current Assets (i-ii) (biv) 16,068.41 26,625.52 27,334.88 28,039.31 31,509.03

TOTAL (B) = (bi+bii+biii+biv) 21,357.29 31,241.36 32,284.88 33,783.04 32,203.45

KEY FINANCIALS AT A GLANCE

BALANCE SHEET (STANDALONE)

Key Financials At A Glance

26



(` in Lacs)

Particulars 2008-09 2009-10 2010-11 2011-12 2012-13

Income

Net Sales 55,234.91 65,746.97 73,744.95 78,348.36 81,485.59

Other Income 5.76 233.96 28.25 8.55 18.59

Increase/(Decrease) in Stock 7,648.49 5,563.95 1,833.10 (1,589.23) 8,468.96

Total 62,889.16 71,544.88 75,606.30 76,767.68 89,973.14

Expenditure

Purchases & Service Charges 52,316.96 60,143.71 65,098.30 67,328.73 82,563.04

Payment to & Provisions for Employees

1,531.75 1,536.16 1,197.18 1,109.03 744.84

Administrative Expenses 4,839.78 3,851.13 3,307.65 2,821.92 4,752.09

Selling & Distribution Expenses 82.71 89.87 24.87 16.47 -

Depreciation & Amortisation 827.57 856.04 987.97 973.70 670.04

Interest & Bank Charges 878.03 1,965.19 2,816.37 2,977.24 3,961.71

Total 60,476.80 68,442.10 73,432.34 75,227.09 92,691.72

Profit/(Loss) Before Expectional Items and Taxation

2,412.36 3,102.78 2,173.96 1,540.59 (2,718.58)

Less : Expectional Item - - - - 4,148.14

Profit/(Loss) Before Tax 2,412.36 3,102.78 2,173.96 1,540.59 (6,866.72)

Provision for Current Taxation (1,105.00) (1,157.00) (690.00) (702.11) -

Provision for Wealth Taxation (0.25) (0.35) (0.49) (0.41) 0.09

Provision for Fringe Benefit Tax (13.20) - - - -

Income Tax for Earlier Years (33.54) (344.30) 443.77 (146.83) (1,517.09)

Provision for Deferred Tax (Asset)/(Reversal)/Liability

78.12 19.74 85.73 159.18 200.17

Profit/(Loss) After Taxation 1,338.49 1,620.87 2,012.97 850.42 (5,549.89)

Balance Profit Brought Forward - - - - -

Net Profit Available for Appropriation

1,338.49 1,620.87 2,012.97 850.42 (5,549.89)

Appropriations

Debenture Redemption Reserve 1,338.49 1,620.87 2,012.97 850.42 -

Balance Carried To Balance Sheet

- - - - (5,549.89)

Total 1,338.49 1,620.87 2,012.97 850.42 (5,549.00)

Earning Per Share (Basic) (F.V. = ` 10/-)

3.44 3.02 3.75 1.59 (10.35)

Earning Per Share (Diluted) (F.V. = ` 10/-)

3.44 3.02 3.75 1.59 (10.35)

KEY FINANCIALS AT A GLANCE

PROFIT AND LOSS ACCOUNT (STANDALONE)

Key Financials At A Glance

27


To The MeMbers of brandhouse reTails liMiTed

report on the financial statements

We have audited the accompanying financial statements of Brandhouse Retails Limited (“the Company”), which comprise

the Balance Sheet as at March 31, 2013, the Statement of Profit and Loss and the Cash Flow Statement for the year then

ended and a Summary of Significant Accounting Policies and Other Explanatory Information.

Management’s responsibility for the financial statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial

position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred

to in sub-section (3C) of Section 211 of the Companies Act, 1956 (“the Act”). This responsibility includes the design,

implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements

that give a true and fair view and are free from material misstatement, whether due to fraud or error.

auditors’ responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in

accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India (ICAI). Those Standards

require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about

whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial

statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material

misstatement of the Financial statements, whether due to fraud or error. In making those risk assessments, the auditor

considers internal control relevant to the Company’s preparation and fair presentation of the Financial statements in order to

design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of

accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating

the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give

the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting

principles generally accepted in India:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2013;

(b) in the case of the Statement of Profit and Loss, of the loss for the year ended on that date; and

(c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

indePendenT audiTors’ rePorT

auditors’ report

28



emphasis of Matter

We draw attention to:

1. Note 39 of the financial statements with regard to the Company facing mismatch in its cash flows and in case the

required financial resources are not raised on a timely basis, the operations of the Company may get impacted,

thereby affecting the assumption of going concern.

2. Note 29 to the financial statements, wherein in respect of the outstanding trade receivables, which are pending for

confirmation, reconciliation and consequential adjustments, if any, the Company is of the opinion that the same are

not likely to be material given the nature and size of its operations and hence no additional provision is required to be

made.

Our opinion is not qualified in respect of the matters stated above

report on other legal and regulatory requirements

1. As required by the Companies (Auditors’ Report) Order, 2003 (“the Order”) issued by the Central Government of

India in terms of sub-section (4A) of Section 227 of the Act, we give in the Annexure, a statement on the matters

specified in paragraphs 4 and 5 of the Order.

2. As required by Section 227(3) of the Act, we report that:

a. we have obtained all the information and explanations which to the best of our knowledge and belief were

necessary for the purpose of our audit;

b. in our opinion proper books of account as required by law have been kept by the Company so far as appears

from our examination of those books;

c. the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in

agreement with the books of account;

d. in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the

accounting standards referred to in sub-section (3C) of Section 211 of the Act;

e. on the basis of written representations received from the directors as on March 31, 2013, and taken on record

by the Board of Directors, none of the directors is disqualified as on March 31, 2013, from being appointed as

a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

f. Note 38 to the financial statements, wherein in the Company has not complied with Section 292A of the

Companies Act, 1956 and the same is pending regularization as at the Balance Sheet date.

auditors’ report

for shyam Malpani & associatesChartered AccountantsFirm Registration No. 103523W

for haribhakti & Co.Chartered AccountantsFirm Registration No. 103523 W

shyam MalpaniProprietorMembership No: 34171

rakesh rathiPartnerMembership No. 45228

Mumbai : 16th July, 2013 Mumbai : 16th July, 2013

29


[referred to in paragraph 1 under ‘report on other legal and regulatory requirements’ in the independent auditors’ report of even date to the members of brandhouse retails limited on the financial statements for the year ended 31st March, 2013]

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) The Company has a regular programme of verification of fixed assets wherein all fixed assets are verified once in a period of three years, which in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed, no material discrepancies were noticed on such verification.

(c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed off by the Company during the year.

(ii) (a) The inventories has been physically verified by the management during the year as well as by an independent Chartered Accountant firm on which we have relied upon. In our opinion, the frequency of such verification is reasonable.

(b) The procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventories and no material discrepancies were noticed on physical verification carried out at the end of the year.

(iii) (a) As informed, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, the provisions stated in paragraph 4 (iii) (b), (c) and (d) of the order are not applicable.

(e) As informed, the Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, the provisions stated in paragraph 4 (iii) (f) and (g) of the order are not applicable.

(iv) In our opinion and according to the information and explanations given to us, the internal control system prevailing in the Company needs to be strengthened so as to make it commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and with regard to the sale of goods and services. During the course of audit, we have not observed continuing failure to correct any major weaknesses in internal control system of the Company.

(v) (a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 that need to be entered into the register maintained under Section 301 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding value of ` five lacs have been entered into during the financial year at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the rules framed there under.

(vii) The Company has an internal audit system, which, in our opinion, requires to be strengthened to make it commensurate with the size and nature of its business.

(viii) The Central Government of India has not prescribed the maintenance of cost records under clause (d) of sub-section (1) of Section 209 of the Act for any of the products of the Company.

annexure to auditors’ report

anneXure To audiTors’ rePorT

30



(ix) (a) Undisputed statutory dues including provident fund, investor education and protection fund, employees’ state insurance, income-tax, sales-tax, wealth-tax, service tax customs duty, excise duty, cess have not been regularly deposited with the appropriate authorities and there have been serious delays in many cases.

(b) According to the information and explanations given to us, undisputed dues in respect of provident fund, investor education and protection fund, employees’ state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and other statutory dues which were outstanding, at the year end for a period of more than six months from the date they became payable are as follows.

name of the statute nature of dues amount (` in lacs)

Period to which the amount relates

The Income Tax Act, 1961 Tax Deducted at Source 121.92 F.Y. 2011-12 and 2012-13

(c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty and cess on account of any dispute, are as follows:

name of the statute nature of dues amount (` in lacs)

Period to which the amount relates

forum where dispute is pending

Sales Tax Act, UP Sales Tax 4.10 F.Y. 2007-08 Deputy Commissioner

Sales Tax Act, Mumbai Sales Tax 12.80 F.Y. 2004-05 Deputy Commissioner

(x) In our opinion, the accumulated losses of the Company are more than fifty percent of its net worth. Further, the Company has incurred cash losses during the current year but has not incurred cash losses in the preceding year.

(xi) In our opinion and according to the information and explanations given to us, the Company has defaulted in repayment of dues to banks and debenture holder which are as follows:

(a) In respect of banks, the Company has defaulted in interest payments as below:

Period of default amount of interest (` in lakhs)

0- 3 Months 265.29

6- 12 Months 332.61

(b) In respect of debenture holders, the Company has defaulted in principal repayment, payment of premium and interest amounting to ` 6,545 lacs, ` 1,309 lacs and ` 1720.47 lacs respectively. The said amount is overdue since 30th September, 2012. Further, the Company has also defaulted in payment of interest amounting to ` 928.41 lacs and the overdue period ranges from 1 to 6 months.

(xii) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause (xiii) of paragraph 4 of the Companies (Auditor’s Report) Order, 2003 (as amended) are not applicable to the Company.

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause (xiv) of paragraph 4 of the Companies (Auditor’s Report) Order, 2003 (as amended) are not applicable to the Company.

(xv) As per the records verified by us and based on the explanations given to us the Company has given guarantee amounting to ` 5,000 Lacs for loans taken by Brandhouse Oviesse Limited from bank of which facility of ` 1,357 lacs only have been availed by them. However, we are unable to comment on whether the terms and conditions of the same in the given condition are prejudicial to the interest of the Company or not.


31


for shyam Malpani & associatesChartered AccountantsFirm Registration No. 120438 W

for haribhakti & Co.Chartered AccountantsFirm Registration No. 103523 W

shyam MalpaniProprietorMembership No: 034171

rakesh rathiPartnerMembership No. 045228

Mumbai : 16th July, 2013 Mumbai : 16th July, 2013

(xvi) During the year, the Company has not obtained any term loans.

(xvii) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that no funds raised on short-term basis have been used for long-term purpose.

(xviii) According to the information and explanation given to us, the Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956.

(xix) According to the information and explanations given to us, no debentures have been issued by the Company during the year.

(xx) The Company has not raised money by way of public issue during the year.

(xxi) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the management.


32



(` in Lacs)

Particulars note no.

Current Year as at 31st March 2013

Previous Year as at 31st March 2012

equiTY and liabiliTiesshareholders’ fund Share Capital 2 5,360.28 5,360.28 Reserves And Surplus 3 4,245.46 9,605.74 9,795.35 15,155.63non-CurrenT liabiliTies Long-Term Provisions 4 54.65 63.06CurrenT liabiliTies Short-Term Borrowings 5 15,747.30 11,342.33 Trade Payables 6 30,159.61 18,932.36 Other Current Liabilities 7 11,376.83 8,986.40 Short-Term Provisions 8 3.94 57,287.68 1,527.34 40,788.43

ToTal 66,948.07 56,007.12asseTsnon-CurrenT asseTsfiXed asseTs Tangible Assets 9 691.50 1,055.54 Intangible Assets 2.92 694.42 1,578.86 2,634.40non-CurrenT invesTMenT 10 - 2,898.10deferred TaX asseTs (neT) 11 - 200.17long TerM loans and advanCes 12 759.93 3,498.22oTher non-CurrenT asseTs 13 20.05 779.98 18.61 6,615.10CurrenT asseTs Inventories 14 28,234.84 19,765.88 Trade Receivables 15 37,182.87 26,958.65 Cash And Bank Balance 16 21.02 9.95 Short Term Loans And Advances 17 34.94 65,473.67 23.14 46,757.62

ToTal 66,948.07 56,007.12signifiCanT aCCounTing PoliCies and noTes

1 to 42

balanCe sheeT as aT 31sT MarCh, 2013

balance sheet

The Accompanying Notes form an integral part of the Financial Statements.

As per our report of even dateFor Shyam Malpani & AssociatesChartered AccountantsFRN 120438W

For Haribhakti & CoChartered AccountantsFRN 103523W

For and on behalf of the Board

Shyam MalpaniProprietorM.No: 34171

Rakesh RathiPartnerM.No: 45228

Nitin S. Kasliwal Chairman & Managing Director

J.S. Shetty Director

Dipesh U. Gosar Company SecretaryPlace : MumbaiDate : 16th July, 2013



33


statement of Profit and loss

(` in Lacs)

Particulars note no.

Current Year ended on 31st March 2013

Previous Year ended on 31st March 2012

inCoMe Revenue from Operations 18 81,485.59 78,348.36 Other Income 19 18.59 8.55

ToTal revenue a) 81,504.18 78,356.91eXPenses Purchases of Stock in Trade 20 82,563.04 67,328.73 (Increase)/Decrease in Inventories of Stock in Trade 21 (8,468.96) 1,589.23

b) 74,094.08 68,917.96 Employee Benefits Expenses 22 744.84 1,109.03 Finance Costs 23 3,961.71 2,991.77 Depreciation and Amortisation Expenses 24 670.04 973.70 Other Expenses 25 4,752.09 2,823.85

c) 10,128.68 7,898.35ToTal eXPenses (b)+(c) d) 84,222.76 76,816.31

ProfiT / (loss) before eXCePTional iTeMs and TaX (a)-(d)

e) (2,718.58) 1,540.60

Less : Exceptional Item 26 4,148.14 -ProfiT / (loss) before TaX f) (6,866.72) 1,540.60less : TaX eXPenses Current tax 1(12) - 702.11 Income tax for earlier years (1,517.09) 146.83 Deferred tax 11 200.17 (159.18) Wealth tax 0.09 0.41

ToTal TaX eXPenses g) (1,316.83) 690.17ProfiT/ (loss) for The Year (f)-(g) (5,549.89) 850.43earning per equity shares (basic & diluted)(nominal value of shares ` 10 each)

1(14) and 31

(10.35) 1.59

signifiCanT aCCounTing PoliCies and noTes 1 to 42

sTaTeMenT of ProfiT and loss for The Year ended 31sT MarCh, 2013

The Accompanying Notes form an integral part of the Financial Statements.

As per our report of even dateFor Shyam Malpani & AssociatesChartered AccountantsFRN 120438W










34



(` in Lacs)Particulars Current Year ended

on 31st March 2013Previous Year ended on 31st March 2012

a. Cash floW froM oPeraTing aCTiviTiesnet Profit /( loss) before Tax (6,866.72) 1,540.60Adjustments for:a) Depreciation/Amortisation (Including ` 1250.04 Lacs (P.Y. ` Nil)

considered in exceptional items.)1,920.08 973.70

b) Loss on Sale of Fixed Assets (Net) 26.05 66.63c) Finance Costs 3,961.71 2,991.77d) Exchange Rate Fluctuation - 5.71e) Provision for diminution in the value of investment (considered as an

exceptional item)2,898.10 -

f) Sundry Balance written off 2,403.65 -g) Provision for Doubtful Deposit 13.36 -operating Profit before Working Capital Changes 4,356.23 5,578.41Movement in Working Capitala) (Increase) / decrease in Inventories (8,468.96) 1,589.20b) (Increase) / decrease in Trade Receivable (10,224.22) (2,355.00)c) (Increase) / decrease in Advance & Deposits 297.92 241.78d) Increase / (decrease) in Trade Payable 11,227.25 (1,268.98)d) Increase / (decrease) in Other Payables & Liabilities 159.40 165.62Cash Generated from /(Used)in Operating Activities (2,652.38) 3,951.03a) Direct Taxes Paid (6.38) (1.09)net Cash flow from /(used in) operating activities Total (a) (2,658.76) 3,949.94

b. Cash floW arising froM invesTing aCTiviTiesa) Acquisition of Fixed Assets (Including Capital Work-in-Progress and

Capital Advances)(8.00) (66.26)

b) Sale of Fixed Assets 12.64 8.93c) Non Current Investments - (1,617.41)net Cash flow from /(used in) investing activities Total (b) 4.64 (1,674.74)

C. Cash floW arising froM finanCing aCTiviTiesa) Change in Short Term Borrowings (Net) 4372.41 466.58b) Interest Paid (1,707.22) (2,739.78)net Cash flow from /(used in) finance activities Total (C) 2,665.19 (2,273.20)neT inCrease/(deCrease) in Cash and Cash equivalenTs

Total (a+b+C) 11.07 2.00Cash & Cash Equivalent at the beginning of the year 9.95 7.95Cash & Cash Equivalent at the end of the year 21.02 9.95neT Change in Cash & Cash equivalenTs 11.07 2.00

Cash flow statement

Cash floW sTaTeMenT for The Year ended on 31sT MarCh, 2013

note :

1. The above Cash Flow Statement has been prepared under the “Indirect Method” as set out in the Accounting Standard-3 (AS-3) “Cash Flow Statement” notified under Section 211(3C) of the Companies Act, 1956.

2. Cash and Cash equivalents include Cash and Bank balances in Current Accounts and in Deposit accounts (Refer Note -16) .3. Previous Year Figures have been recast/restated wherever necessary.

The Accompanying Notes form an integral part of the Financial Statements.As per our report of even dateFor Shyam Malpani & AssociatesChartered AccountantsFRN 120438W










35


noTe: 1 signifiCanT aCCounTing PoliCies

1. Corporate information

Brandhouse Retails Limited (BHRL) is a Public Company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on two stock exchanges in India. The Company was established as a pure play retail organisation. As a company that caters to the entire spectrum of the socio-economic stratum in the Indian market, BHRL’s retail expertise extends from mid-price to the lifestyle and luxury segment.

Driven by a team of specialists with experience in Retail and Brand building, BHRL’s proficiency is focused to retailing of fashion wear - Textiles, Apparels, Home Textiles and Fashion Accessories.

BHRL is amongst the leading Fashion Retailers in India. It currently manages the retailing of the brands i.e. Reid and Taylor, Belmonte and Carmichaelhouse through Exclusive Brand Outlets across India.

2. basis of preparation of financial statement

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The Company has prepared these financial statements to comply in all material respects with the accounting standards notified under the Companies (Accounting Standards) Rules 2006, (as amended) and the relevant provisions of the Companies Act,1956. The Financial statements have been prepared on an accrual basis and under the historical cost convention. The accounting policies adopted in the preparation of Financial Statements are consistent with those of previous year.

3. use of estimates

The presentation of financial statements requires estimates and assumptions to be made that affect the value of assets and liabilities as well as revenues and expenses as reported in the financial statements. The difference between the actual result and estimates are recognized during the period in which they are materialized / known.

4. Tangible assets

Tangible Assets are stated at their original cost, net of Cenvat/value added tax and includes amounts added on revaluation, less accumulated depreciation and impairment loss, if any. The cost includes interest, financial charges, freight, taxes and other incidental expenses incurred for acquisition and installation of the assets.

5. intangible assets

Intangible assets are recognised when it is probable that the future economic benefits that are attributable to the asset will flow to the enterprise and the cost of the asset can be measured reliably.

6. depreciation and amortisation

i. The Company provides depreciation on Tangible assets on Straight Line Method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956. In respect of Leasehold Improvements and Visuals, the Company amortises the entire value over their useful life as estimated by the management or primary period of lease, including any further renewal period thereof, whichever is lower. Depreciation on additions to Tangible Assets is provided for on pro-rata basis from the date of addition/acquisition till the end of the year and on assets sold/discarded/demolished to the date of disposal.

ii. Depreciation on assets each costing less than ` 5000/- is provided for at 100% of the cost as specified in Schedule XIV to the Companies Act, 1956.

iii. In respect of Stores closed, the WDV of Improvement, Visuals and Furniture and Fixture is depreciated @ 100% in the year in which stores are closed down.

iv. Computer software/System Development : Amortised over a period of five years.

notes to the financial statements

36



7. Capital Work in Progress

Projects under commissioning and other capital work-in-progress are carried at cost, comprising direct cost, related incidental expenses, interest and other financing costs payable on funds specifically borrowed to the extent they relate to the period till assets are ready for intended use.

8. impairment of assets

The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is greater of the assets net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital.

9. borrowing Costs

Borrowing costs attributable to the acquisition/construction of a qualifying asset are capitalised as part of the cost of such assets, up to the period assets are ready for their intended use. Other borrowing costs are recognised as an expense in the period in which they are incurred.

10. revenue recognition

i. Sales are recognised on transfer of risk and reward which generally coincides with dispatch of goods to the customers.

ii. Sales are shown net of returns and Value Added Tax.

iii. Interest Income is recognised on time proportion basis, taking into account the amount outstanding and the rate applicable.

iv. Claims are accounted for when no significant uncertainties are attached to their eventual receipts on acceptance basis.

v. Revenue from sale of services are recognised when services have been rendered and there are no significant uncertainties attached to their eventual receipt.

11. employee benefits

i. Employee benefits comprise both defined contribution and defined benefit plans.

defined contribution Plan:

Contribution to defined contribution plans are recognised as expenses in the Statement of Profit and Loss, as they are incurred.

defined benefit Plan :

The Company’s liability towards gratuity and Leave encashment is accounted for on the basis of an actuarial valuation, applying Projected Unit Credit Method done at the year end and is charged to Statement of Profit and Loss.

ii. All short term employee benefits are accounted for on undiscounted basis during the accounting period based on services rendered by employees.

12. accounting for Taxes on income

i. Current tax is determined as the amount of tax payable in respect of taxable income for the year, based on the applicable tax rates and tax laws.

ii. Deferred tax is recognised on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods and is measured using tax rates that have been enacted or substantively enacted as on the Balance Sheet date. Where


37


there is unabsorbed depreciation or carry forward losses, deferred tax assets are recognised only if there is virtual certainty of realisation of such assets. Other deferred tax assets are recognised only to the extent there is reasonable certainty of realisation in future. Deferred tax assets/ liabilities are reviewed on yearly basis to reassess their realisation.

13. foreign Currency Transactions / fluctuations

a. Foreign Exchange transactions are recorded as per the rates prevailing on the dates of transactions and at year end are restated at rate as on Balance Sheet date.

b. Resultant Foreign exchange gain/ loss on restatement of Assets / Liabilities are charged to Statement of Profit and Loss.

14. earnings per share

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

15. Provisions, Contingent liabilities & Contingent assets

A provision is recognised when an enterprise has a present obligation as a result of past event; it is probable that an outflow of resources embodying economic benefit will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. A contingent liability is disclosed, unless the possibility of an outflow of resources embodying the economic benefit is remote.

A contingent asset is neither recognised nor disclosed in the financial statements.

16. segment reporting Policies

The entire operations of the Company comprise of only one segment, namely Retail and as such, no separate segment reporting is considered necessary for segment reporting as stipulated in Accounting Standard-17 notified under Section 211(3C) of the Companies Act,1956.

17. leases

Leases where the lessor effectively retains substantially all the risks and benefits of ownership over the leased term are classified as operating leases. Operating lease rentals are recognised as an expense, as applicable, over the lease period.

18. investments

Investments that are readily realisable and intended to be held for not more than a year are classified as current investments. All other investments are classified as Non Current investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Non Current investments are carried at cost. However, provision for diminution in value is made to recognise a decline other than temporary in the value of the investments.

19. Cash & Cash equivalents

Cash and Cash equivalents for the purpose of cash flow statement comprise cash at bank and on hand and short-term investments with an original maturity of three months or less.

20. inventories

Stock in Trade comprising of Textiles and made-ups (including accessories) are carried at the lower of cost or Net realisable value, where cost comprises of all purchase costs and other costs incurred in bringing the inventories to their present location and condition. Goods in Transit are carried at cost.


38


9TH ANNUAL REPORT 2012-13 notes to the financial statements

Particulars as at 31st March, 2013 as at 31st March, 2012number ` in lacs number ` in lacs

noTe :2 share CaPiTal

authorised share CapitalEquity Shares of `10 each 6,00,00,000 6,000.00 6,00,00,000 6,000.00issued, subscribed and Paid upEquity Shares of `10 each fully Paid up 5,36,02,767 5,360.28 5,36,02,767 5,360.28Total share Capital 5,36,02,767 5,360.28 5,36,02,767 5,360.28

a) reconciliation of the shares outstanding at the beginning and at the end of the reporting period :

equity sharesAt the beginning of the Year 5,36,02,767 5,360.28 5,36,02,767 5,360.28Shares issued during the Year - - - -Shares bought back during the year - - - -outstanding at the end of the Year 5,36,02,767 5,360.28 5,36,02,767 5,360.28b) Terms/rights attached to equity shares : The Company has only one class of equity share having a par value of `10 per share. Each holder of Equity Share is

entitled to one vote per share. The Company declares and pays dividend in Indian Rupees. The dividend, if proposed by the Board of Directors, is subject to the approval of the shareholders in the ensuing Annual General Meeting. The Board of Directors have neither declared nor proposed any Dividend for the current year.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the Shareholders.

C) details of shareholders holding more than 5% shares in the Company :name of shareholder as at 31st March, 2013 as at 31st March, 2012

no. of shares held

% of holding no. of shares held

% of holding

Anjaneya Holdings Private Limited 1,67,03,229 31.16% 2,05,03,229 38.25%Sansar Exim Private Limited 53,00,000 9.89% 53,00,000 9.89%

Total 2,20,03,229 41.05% 2,58,03,229 48.14%

(` in Lacs)Particulars as at

31st March, 2013as at

31st March, 2012noTe : 3 reserve and surPlussecurities Premium accountBalance as per Last financial statement 2,635.80 2,665.88Less: Premium on Redemption of Non-Covertible Debentures - 30.08Closing balance (a) 2,635.80 2,635.80debenture redemption reserveBalance as per Last financial statement 6,545.00 6,309.12Add: Transfer from Statement of Profit and Loss - 235.88Closing balance (b) 6,545.00 6,545.00The Company has already created 100% Debenture Redemption Reserve in Previous Years.surplus/(deficit) in the statement of Profit and lossBalance as per Last financial statement 614.55 -Add: Profit / (Loss) for the Year (5,549.89) 850.43Less: Transfer to Debenture Redemption Reserve - 235.88Closing balance (c) (4,935.34) 614.55

ToTal (a+b+c) 4,245.46 9,795.35

39



(` in Lacs)

Particulars as at31st March, 2013

as at31st March, 2012

noTe :4 long-TerM Provisions

Provision for employee benefit

Gratuity (Unfunded) (Refer Note 1 (11) and 30) 35.33 37.13

Leave Encashment (Unfunded) (Refer Note 1 (11) and 30) 19.32 25.93

ToTal 54.65 63.06

note :5 shorT-TerM borroWings

secured loan

loans repayable on demand

From Bank (Refer Note 5 A) 11,749.13 11,342.33

unsecured loan

loans repayable on demand

From Bank (Refer Note 5 B) 3,998.17 -

ToTal 15,747.30 11,342.33

noTe : 5 a

Loans from Banks (Working Capital facilities repayable on Demand) amounting to `11,749.13 Lacs ( P.Y. ` 11,342.33 Lacs) are secured by hypothecation of:

i. Principal Security first pari-passu - present and future Current Assets of the Company.

ii. Second pari-passu – present and future Movable and Non-Movable Fixed Asset of the Company.

iii. Personal Guarantee of Chairman and Managing Director Mr. Nitin Kasliwal.

iv. Corporate Guarantee given by M/s Anjayana Holding Pvt.Ltd.

The above Loans from Bank(Working Capital Facilities) carries interest @ 13.75% to 15%.

noTe : 5 b

This is a Short Term Loan which is repayable within 6 Months from the date of first disbursement i.e. 23rd July, 2013 or on demand whichever is earlier and following is the collateral security and guarantee given:

i. First Charge on Office at B2, 5th Floor, Marathon Nextgen, Lower Parel, Mumbai belonging to M/s S. Kumar Nationwide Ltd.

ii. Second Charge on Flat No 22, 22nd Floor, Palais Royale, G.K. Marg, Worli, Mumbai held by M/s Ashwini Solar Energy Pvt. Ltd.

iii. Personal Guarantee of Chairman and Managing Director, Mr. Nitin Kasliwal and Mrs. Jyoti Kasliwal.

iv. Corporate Guarantee given by M/s S. Kumars Nationwide Limited, M/s Anjayana Holding Pvt. Ltd and M/s Ashwini Solar Energy Pvt Ltd.

v. Pledge of 85,50,000 Equity Shares of M/s S.Kumar Nationwide Ltd held by M/s Anjaneya Holding Pvt Ltd.

The above Loan from Bank (Working Capital Facilities) carries interest @ 14%.

40



(` in Lacs)



noTe :6 Trade PaYables

Trade Payables for goods Purchase & services received

Due to Micro, Small and Medium Enterprises*. - -

Due to Others 30,159.61 18,932.36

ToTal 30,159.61 18,932.36

*As represented by Management and relied upon by auditors there is no amount payable to Micro, Small and Medium Enterprises as on 31st March 2013.

noTe :7 other Current liabilities

Current Maturities of Long-Term Debt (Secured Non Convertible Debenture) (Refer Note 7 A and 7B)

- 6,545.00

Unpaid Matured Debentures and Interest accrued thereon (Secured Non Convertible Debenture) (Refer Note 7 A ,7B and 7C (i))

8,928.99 267.12

Interest accrued and due (Refer Note : 7C) 597.90 -

Interest accrued but not due 12.69 472.97

Book Overdraft with Banks 14.73 47.29

Statutory Dues Payable 354.81 194.08

Creditors for Capital goods 1.45 8.75

Debentures Redemption Premium Payable (Refer Note 7 A ,7B and 7C) 1,309.00 1,309.00

Other Payables * 157.26 142.19

ToTal 11,376.83 8,986.40

* Other Payables include Credit Balance of Trade Receivables and Amount Payable to Employees.

noTe : 7 a

19% Non-Convertible Debentures (NCDs) issued to India Debt Management Limited are secured in favour of the Debenture Trustees, IDBI Trusteeship Services Ltd by way of the following;

a) Primary security

i) An English Mortgage on the immovable fixed assets of the Company situated at Plot No. 3, Survey No. 37, Mouje Ishwarpura, Taluka Kadi, District Mehsana, and Ahmedabad to secure issue of the Debenture Certificate.

ii) Equitable Mortgage on future immovable fixed assets of the Company other than that mentioned in i) above.

iii) Charge on the present and future movable fixed assets of the Company.

b) additional security

i) Pledge and Default Call Option exercise on 65,00,000 equity shares of S. Kumar Nationwide Limited (SKNL) held by Anjaneya Holding Pvt Ltd. (AHPL) were pledged with IDM on 13th June, 2011 as an additional security for NCDs which were invoked by IDM on 10th May, 2013.


41


(` in Lacs)



ii) Pledge and Default Call Option exercise on the 10,00,000 Equity Shares of ` 10/- each of the Company held by SKNL.

noTe : 7 b

redemption of the non convertible debentures

The NCDs were redeemable as on 30th September, 2012 alongwith redemption Premium of 20% .

noTe : 7 C

i) There is a delay in payment of NCD dues amounting to ` 10,237.99 lacs for the period of six months (P.Y. ` 267.12 Lacs towards Interest payment delay of one day).

ii) There is delay in Interest payment of ` 597.90 Lacs (P.Y. Nil) to Banks for working Capital Loan for a period ranging from 3 to 12 months.

noTe :8 shorT TerM Provisions

Provision for employee benefit

Gratuity (Unfunded) (Refer Note 1 (11) and 30) 1.06 0.71

Leave Encashment (Unfunded) ( Refer Note 1 (11) and 30) 2.38 3.42

other Provision

Provision for Income Tax (Net of Advance Tax for P.Y. ` 16.14 Lacs) (Refer Note 1 (12))

- 1,522.80

Provision for Wealth Tax 0.50 0.41

ToTal 3.94 1,527.34


42


9TH ANNUAL REPORT 2012-13 notes to the financial statementsn

ote

: 9

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43


(` in lacs)

Particulars as at 31st March 2013

as at 31st March 2012

noTe :10 non CurrenT invesTMenT ( refer noTe 1(18))

Trade investment (unquoted)

Investment in Equity Instruments of Brandhouse Oviesse Ltd.

2,89,81,030 (P.Y.2,89,81,030) of ` 10/- each, fully Paid-up (Extent of holding in subsidiary 58%, P.Y 62.50%)

2,898.10 2,898.10

Less : Provision for diminution in the value of Investments (Refer Note: 26)

(2,898.10) -

ToTal - 2,898.10

Brandhouse Oviesse Ltd, a subsidiary of the Company, in joint venture with Gruppo Coin S.p.A, has taken effective steps to close down its business operations in view of the unviable operations. Company has therefore made a provision for diminution in the value of its Investment in BOL amounting to ` 2898.10 Lacs and due to which the accounts of Subsidiary Company for the Current financial year ending on 31st March, 2013 are not consolidated.

noTe :11 deferred TaX asseTs (neT) (refer noTe 1 (11))

Deferred Tax Assets (In view of the losses from operations, on prudent basis, deferred tax Assets have been recognised only upto deferred tax liabilities.)

Fixed assets : Impact of difference between tax depreciation and depreciation/amortization charged for the financial Reporting

- 178.38

Expenses u/s 43B allowable on Payment Basis - 21.79

Gross Deferred Tax Assets a) - 200.17

Deferred Tax Liabilities b) - -

Net Deferred Tax Assets charged to Statement of Profit and Loss ToTal (a-b)

- 200.17

noTe :12 long TerM loans and advanCes

unsecured & Considered good, unless stated otherwise

Capital Advance-Considered good a) - 10.79

deposits

Unsecured Considered Good 759.93 3,487.43

Unsecured Considered Doubtful 72.82 59.46

832.75 3,546.89

Less: Provision for Doubtful Deposit 72.82 59.46

b) 759.93 3,487.43

ToTal (a)+(b) 759.93 3,498.22


44





noTe :13 oTher non-CurrenT asseTs

Fixed Deposit Account with Scheduled Banks 20.05 18.61

(Out of above ` 6.99 Lacs (P.Y. ` 6.44 Lacs) FDR Kept with DLF Ltd Delhi towards TDS and remaining `13.06 Lacs pledge ( P.Y. ` 12.17 Lacs pledged with Sales Tax Authorities)

ToTal 20.05 18.61

noTe :14 invenTories (refer noTe 1(20))

inventories (at lower of cost and net realisable value)

Stock in Trade 28,234.84 19,765.88

(Including Goods in transit of ` 300.74 lacs (In Previous Year: ` 5.87 Lacs) (Refer Note-21)

ToTal 28,234.84 19,765.88

noTe :15 Trade reCeivables (refer noTe 1(10) and 29)

unsecured, unless stated otherwise

Trade receivable : Outstanding for a Period Less than six months from the date they are due for payment

Considered good 32,481.30 24,653.16

Considered Doubtful - -

Trade receivable : Outstanding for a Period exceeding six months from the date they are due for payment

Considered good 4,701.57 2,305.49

Considered Doubtful - -

ToTal 37,182.87 26,958.65

noTe :16 Cash and bank balanCes

Cash and Cash equivalents

Balance with Scheduled Banks in Current accounts 7.41 1.55

Cash in Hand 13.61 8.40

ToTal 21.02 9.95

noTe :17 shorT-TerM loans and advanCes

unsecured, Considered good unless stated otherwise

Advances recoverable in Cash or kind for Value to be received 13.40 -

others advances

Advance to Suppliers 2.55 0.77

Advance Tax (Net of Provision for Tax C. Y. Nil) 0.67 -

Staff Advances 11.17 8.54

Refund Receivable :- from Custom Authorities - 0.96

Prepaid Expenses 7.15 12.87

ToTal 34.94 23.14


45


(` in lacs)

Particulars Current Year ended on 31st March, 2013

Previous Year ended on 31st March, 2012

noTe :18 revenue froM oPeraTions (refer noTe 1(10))

Sales of Merchandise 81,038.43 77,830.15

Sales of Services -Tailoring 447.16 518.21

ToTal 81,485.59 78,348.36

details of Merchandise sold

Textiles -Mtrs 45,993.22 38,058.09

Textiles -Pcs 32,759.50 36,540.86

Madeups-Pcs 2,285.71 3,231.20

As the Company is carrying out trading activity, excise duty is not applicable.

ToTal 81,038.43 77,830.15

noTe :19 oTher inCoMe

Interest (Refer Note 1 (10) (iii))

- on fixed deposit 1.65 1.70

- on others 0.22 0.09

Other Non Operating Income 16.72 6.76

ToTal 18.59 8.55

noTe :20 PurChases of sToCk in Trade

Purchase of Merchandise 82,233.50 66,963.49

Tailoring Expenses 329.54 365.24

ToTal 82,563.04 67,328.73

details of Merchandise Purchase

Textiles - Mtrs 42,419.91 30,639.99

Textiles - Pcs 37,951.02 34,323.80

Madeups - Pcs 1,862.57 1,999.70

ToTal 82,233.50 66,963.49


46



(` in lacs)

Particulars Current Year ended on 31st March 2013


noTe :21 (inCrease)/deCrease in invenTories of sToCk in Trade

Inventories at the end of the year 28,234.84 19,765.88

Less: Inventories at the beginning of the year 19,765.88 21,355.11

net (increase)/decrease in inventories ToTal (8,468.96) 1,589.23

details of inventory

Textiles -Mtrs 10,906.09 10,159.89

Textiles -Pcs 14,363.63 6,011.08

Madeups-Pcs 2,965.12 3,594.91

ToTal 28,234.84 19,765.88

noTe :22 eMPloYee benefiT eXPenses

Salaries, Wages, Bonus and Other Benefits 688.98 1,042.22

Gratuity (Refer Note 30) 8.15 -

Contribution to Provident and Other Fund 41.52 54.95

Staff Welfare Expenses 6.19 11.86

ToTal 744.84 1,109.03

noTe :23 finanCe CosTs

Interest * 3,786.09 2,883.53

Other Borrowing Cost 175.62 108.24

ToTal 3,961.71 2,991.77

* Out of the total Interest Cost of ` 3,786.09 Lacs, ` 55.84 Lacs (Previous Year ` 14.53 Lacs) is on account of delay in payment of statutory dues.

noTe :24 dePreCiaTion and aMorTisaTion

Depreciation on tangible assets 344.14 654.26

Amortisation on intangible assets 325.90 319.44

ToTal 670.04 973.70


47


(` in lacs)

Particulars Current Year ended on 31st March 2013


noTe :25 oTher eXPenses

Rent (Refer Note 34) 1,862.48 2,107.31

Rates and Taxes 8.56 18.56

Repairs and Maintenance-others 24.37 43.83

Travelling Expenses - Foreign - 66.99

Travelling Expenses - Inland 18.74 38.05

Electricity Charges 173.07 180.26

Vehicle Maintenance 17.95 14.09

Directors' Sitting Fees 6.12 5.36

Remuneration to Auditors (Refer details below) 30.90 31.99

Showroom Expenses 34.52 36.71

Exchange Rate fluctuations (Net) - 5.71

Insurance 13.23 21.03

Conveyance 11.25 15.11

Legal and Professional Charges 28.49 47.20

Postage and Telephones 34.05 56.76

Printing and Stationery 15.28 20.83

Security Services Charges 18.21 19.75

Loss on Sale of Fixed Assets (Net) 26.05 66.63

Provision for Doubtful Deposits 13.36 -

Sundry Balance written off 2,403.65 -

General Expenses 11.81 27.68

ToTal 4,752.09 2,823.85

*Remuneration to Auditors

Audit Fees 17.98 17.65

Tax Audit Fees 4.49 4.41

Limited Review Fees 8.43 9.93

ToTal 30.90 31.99

noTe :26 eXCePTional iTeMs

Provision for diminution in the value of Investments 2,898.10 -

Impairment of intangible assets 1,250.04 -

ToTal 4,148.14 -


48



noTe: 27 ConTingenT liabiliTies (` in Lacs)

sr. no



a) guarantees:

i. Corporate Guarantee given for Brandhouse Oviesse Ltd. (Outstanding Amount at the year end is ` 1,357.58 Lacs (P.Y. ` 1,019.58 Lacs))

5,000.00 5,000.00

b) Claims not acknowledged as debts:

i. Sales Tax – Dispute in Appeal-Mumbai 12.80 12.80

ii. Sales Tax – Dispute in Appeal - Ghaziabad 4.10 4.10

iii. DLF Limited Delhi towards Tax deducted at source 6.99 * 6.45 *

iv. As may arise due to delay / non-compliance of certain statutory requirement.

Amount Unascertainable

Amount Unascertainable

* FDR with Schedule Bank ` 6.99 Lacs (P.Y. ` 6.45 Lacs) kept as deposit against same.

noTe: 28

Estimated amount of Contracts remaining to be executed on capital or other account and not provided for (net of advances) ` Nil (Previous Year ` Nil).

noTe: 29

The confirmation, reconciliation and adjustment of balances pertaining to Trade Receivables, Trade Payables and Loan and Advances is an ongoing process. Such adjustments are made and balances as on 31st March,2013 have been independently confirmed. Based on this, Company has indentified and made a Provision for ` 13.66 Lacs and written off ` 2403.65 Lacs for unconfirmed/Non recoverable balances during the year.

noTe: 30

The Company has classified the various benefits provided to employees under the purview of Accounting Standard 15 (Revised) as under:

i) Defined Contribution Plans

a) The Employees Provident Fund and Miscellaneous Provisions Act,1952 and Employees Pension Scheme,1995.

b) The Employees State Insurance Act,1948

The Company has recognised the following amounts in the Statement of Profit and Loss: (` in Lacs)

Particulars as at31st March 2013

as at31st March 2012

Employer’s contribution to Provident Fund and Pension Scheme 30.70 41.94

Employer’s contribution to Employees State Insurance 10.82 13.01

ii) Defined Benefits Plan

a. Contribution to Gratuity (Non Funded Scheme)

b. Leave Encashment (Non Funded Scheme)

49



In accordance with the Accounting Standard (AS 15) (Revised), actuarial valuation was performed in respect of the aforesaid defined benefit plans based on following assumptions:

Particulars as at31st March 2013

as at31st March 2012

Discount Rate (Per Annum) 8.25% 8.75%

Rate of increase in compensation levels (Per Annum) 5% 5%

Expected average remaining lives of the employees (in no. of years) 18 18

Attrition Rate 2% 2%

a. Change in Present value of obligation (` in Lacs)

Particulars as at 31st March

2013 (gratuity)

as at 31st March

2012 (gratuity)

as at 31st March

2013 (leave encashment)

as at 31st March


Present value of defined benefits obligation as at the beginning of the period

37.84 38.78 29.35 40.87

Interest Cost 3.31 3.20 2.57 3.37

Current Service Cost 9.57 12.82 6.29 8.79

Benefits Paid (9.60) (0.94) (17.28) (36.04)

Actuarial (Gain) / loss on obligation (4.73) (16.02) 0.77 12.36

Present value of defined benefits obligation as at the end of the period

36.39 37.84 21.70 29.35

b. amount recognised in the balance sheet (` in Lacs)


2013 (gratuity)

as at 31st March

2012 (gratuity)

as at 31st March


as at 31st March


Present value of defined benefits obligation as at the end of the period

36.39 37.84 21.70 29.35

Liability / (Net Asset) recognised in the Balance Sheet

36.39 37.84 21.70 29.35

C. balance sheet reconciliation (` in Lacs)


2013 (gratuity)

as at 31st March

2012 (gratuity)

as at 31st March


as at 31st March


Opening Net Liability 37.84 38.78 29.35 40.87Expenses as Above 8.15 - 9.63 24.52Net Transfer in - - - -(Net Transfer Out) - - - -Benefit Paid (9.60) (0.94) (17.28) (36.04)Net amount recongnised in the Balance Sheet 36.39 37.84 21.70 29.35

50



d. expenses recognised in the statement of Profit and loss (` in Lacs)


2013 (gratuity)

as at 31st March

2012 (gratuity)

as at 31st March


as at 31st March


Current Service Cost 9.57 12.82 6.29 8.79

Past Service Cost - - - -

Interest Cost 3.31 3.20 2.57 3.37

Net Actuarial (Gain) / Loss Recognised in the period

(4.73) (16.02) 0.77 12.36

Total expenses recognised in the Statement of Profit and Loss

8.15 - 9.63 24.52

e. experience adjustment (` in Lacs)

Particulars gratuity for year ended on leave encashment for year ended on

2013 2012 2011 2010 2009 2013 2012 2011 2010 2009

On Plan Liability (Gain)/Loss (6.13) 1.58 (17.71) (10.40) (5.92) (0.07) 13.33 (2.98) 3.72 20.92

On Plan Assets (Loss)/Gains - - - - - - - - - -

noTe: 31 earnings Per share :- basiC & diluTed (` in Lacs)


basic & diluted


basic & diluted

Numerator – Net Profit / (Loss) After Tax (` In Lacs) (5,549.89) 850.43

Number of Equity Shares used as denominator 5,36,02,767 5,36,02,767

Nominal Value Per Equity Share (`) 10.00 10.00

Earnings Per Shares- (`) for basic and diluted (10.35) 1.59

noTe: 32

Based on the age of the Assets situated at various locations/stores and considering the fact that the Company operates generally in the leased out properties, the management is of the opinion that there was no material impairment in its fixed assets, except Goodwill which was impaired during the year under review with in the definition of Accounting Standard 28, Impairment of Assets notified under 211(3C) of the Companies Act,1956. The position is reviewed on yearly basis.

51



noTe: 33

Related Parties Disclosure under Accounting Standard-18

Brandhouse Oviesse Ltd. (w.e.f. 29.07.2009). Subsidiary CompanyS. Kumars Nationwide Ltd.

Key Enterprises in which directors are interested.

Belmonte Retails Ltd.Sansar Exim Pvt. Ltd.Anjaneya Holdings Pvt. Ltd.Reid and Taylor (India) Ltd.Ingenious Finance and Investment Pvt. Ltd.Verve Properties and Investments Pvt. Ltd.Natty Finance and Investment Pvt. Ltd.Tulja Enterprises Pvt. Ltd.Chamundeshwari Mercantile Pvt. Ltd.Chamundeshwari Trading & Finance Pvt. Ltd.Maverick Mercantile Pvt. Ltd.S Kumars Enterprises (Synfabs) Ltd. S Kumars Textiles Ltd.S.K.Worsteds Pvt LtdRosewood Holdings Pvt Ltd.SKNL International B.V.SKNL Europe B.V.SKNL Italy S.P.ASKNL Global Holding B.V.LEGGIUNO S.P.A.SKNL North America B.V.N ‘ Essence Holdings Limited.S. Kumars (U.K.) Ltd.

Key Enterprises in which directors are interested.

Anjaneya Foundation.SKNL Foundation.Remala Trading B.V.Coppley CorpMarling and Evans Ltd, U.K.Global Apparel (U.S) LimitedGlobal Apparel (France) Limited.Global Apparel (Hongkong) Limited.HMX Poland sp. Z.o.oHMX Acquisition Corp.HMX Des Plaines LLC.HMX LLC.HMX, DTC Co. Quartet Real Estate LLC.7172931 Canada LimitedMr. Nitin S. Kasliwal – Chairman and Managing Director Key Management PersonnelMs. Anjani N. Kasliwal (Daughter of Shri Nitin S. Kasliwal) Relative of Key Management Personnel

52



Transactions with related Parties: (` in Lacs)

nature of Transactions as at 31st March 2013


Purchases of goods

Reid and Taylor ( India) Ltd (Net of Discount) 55,338.53 43,826.82

S.Kumars Nationwide Ltd (Net of Discount) 26,858.94 22,974.90

ToTal 82,197.47 66,801.72

relatives of key Management Personnel

Ms. Anjani N. Kasliwal - Salary Payment 17.00 17.00

ToTal 17.00 17.00

Creditors outstanding at the Year end

Reid and Taylor ( India) Ltd 29,732.16 16,665.66

S.Kumars Nationwide Ltd (13.40) 1,735.46

Salary Payable to Ms.Anjani Kasliwal 8.82 -

ToTal 29,727.58 18,401.12

i) Related party relationships are as identified by the management and have been relied upon by the Statutory auditors.

ii) There is no amount written off or written back to/ from related parties.

noTe: 34

i) The Company has obtained various stores on operating Lease. Non-cancellable Lease payments made during the year debited to Statement of Profit and Loss is ` 1,862.48 Lacs (Previous Year ` 2,107.31 Lacs).

ii) The amount of future minimum lease payments/commitment under Non Cancellable operating Lease is as under:

(` in Lacs)

Period as at 31st March 2013


Not later than one year 1,592.32 1,746.68

Later than one year but not later than five years 2,929.24 4,403.73

Later than five years 98.83 216.67

iii) The terms and conditions attached to the Operating Lease are as under:

The Lease of the Leased premises is generally for the period of 3 years and the said leased period shall be renewed twice at the option of the Lessee for the further period of 3 years for each renewal subject to lessee exercising its option in writing upon the same terms and condition agreed, except for rent which shall be escalated @15% on the last paid rent subject to negotiation.

noTe: 35

i. value of imports on Cif basis (` in Lacs)

Particulars Year ended31st March 2013

Year ended31st March 2012

Samples & Sales Promotion - 12.45

Purchase of Merchandise - 61.86

53


ii. expenditure in foreign Currency (` in Lacs)

Particulars Year ended31st March 2013

Year ended31st March 2012

Foreign Travel - 39.47

noTe: 36

There are no earnings in foreign currency in current year as well as in previous year.

noTe: 37

There are no foreign currency exposure in current year as well as in previous year.

noTe: 38

In view of the resignation of some of the independent/non-executive directors during the year under review, the composition of the Audit committee is not in accordance with the requirements of section 292A of the Companies Act, 1956 and clause 49 of the Listing Agreement. The Company is in the process of setting right the composition of the Audit Committee in line with section 292A of the Companies Act, 1956 and clause 49 of the Listing Agreement

noTe: 39

The Company is facing a mismatch in its cash flow mainly on account of the delay in roll out of new stores due to adverse market conditions. This has affected the timely servicing of dues to the lenders and have resulted in delayed payment of statutory dues. Consequently, loans aggregating ` 10,237.99 Lacs (Net of TDS) have been recalled. The Company is in the process of making necessary arrangements to obtain adequate financial resources for managing its day to day operations and discharging its liabilities as and when due. In case, required financial resources are not raised on a timely basis, the operations of the Company may get impacted, thereby affecting the assumption of going concern.

noTe: 40

In the opinion of the management the current and non current assets have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated.

noTe: 41

There are no events subsequent to the Balance Sheet date, which would materially affect the accounts and the related disclosure for the year ended 31st March, 2013.

noTe: 42

Prior year figures have been regrouped and reclassified wherever necessary.



J. S. Shetty Director

Place : Mumbai Date : 16th July, 2013

Dipesh U. Gosar Company Secretary


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Regd. Office: Marathon NextGen, B-2, 5 th Floor, G.K Marg, Lower Parel, Mumbai: 400 013Tel.:91-22-24824500. Fax.:91-22-24931685 www.brandhouseretails.com

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